Horror story time. Many people don’t have a will, have an old one that needs updating, or have one that lacks key specifics. Sadly, this leads to a myriad of problems. A few examples made me look seriously at my own documents.
Too late, too little consideration of an asset?
Michelle has been working with her 94-year-old mother, Rose, to try to get her documents in order. Rose is mentally very sound and has lived alone in her house for some 40 years, since her husband died. She says the house is a knock-down, and she’s likely right. However, the house sits on a large, prime, corner lot in an affluent neighbourhood. Rose’s will doesn’t include the house or the land it is on. She has three daughters, two of whom don’t get along. Problematic…
A Family Cottage …. A Family dilemma
Roger has a family vacation home on a lake in cottage country. It was left to him by his parents, and it has been passed down through several generations. It’s a great place for summer fun, for getting away, and for family reunions. Think parasailing, water skiing, swimming, and barbeques. The family and extended family have had many memorable events there. Over the years it has been beautifully updated and maintained. Roger’s wife passed away several years ago. They have two kids, a son and a daughter – the son has 2 kids, and the daughter has 3. So Roger has 5 grandchildren. Recently, in updating his will, he faced the dilemma that he is not sure what is fair and who could or would look after the cottage properly. Or if suddenly he passes away, who will inherit the cottage is in question.
There are several options, as he sees it. He thinks he must choose among his close family members. He could leave it jointly to his son and daughter. But sadly, his son has a life- threatening illness and is very likely to predecease his dad. That would mean that the daughter would become the sole owner of the property. He could leave it jointly to the 5 grandchildren, but one lives far away and couldn’t really make use of it. Also, this solution would require the kids to all collaborate on management, use, and future of the cottage, which could be very challenging. Roger also considered leaving it to his oldest grandson, Will, before he thought it through and realized that this would be unfair for Will as well as for the other four, and that the other four would feel that Roger had slighted them. Should he leave it to the ones who live close by or best have the means to look after it?
His ultimate decision could create a rift in the family, pitting one grandchild off another so he had to consider all options and choose wisely! Roger’s nephew, a lawyer, came up with a workable solution – mandate in the will that the cottage be sold on Roger’s death. That way, any one of the kids or grandkids could buy it, or any combination of them could do so, under their own terms. The sale would not have to be at market price. Also, this solution would not obligate any one of the relatives to own some or all of a property they do not want to own.
Needs a dose of realism?
Annie, a 70-year-old widow, is a talented artist and a passionate traveler. She isn’t good at financial management, and after her husband passed away, she ended up living on her government pensions. She’s OK, though, and she is happy with what she has. Recently she prepared her will and final wishes, and shared them with Sophie, her daughter and only child. The final wishes include funeral and burial details, and they are interesting. Annie wants to be buried (and specifically not cremated!) on a hill overlooking the ocean, with lots of flowers and trees around her gravestone. She would like a celebration of life at the golf club where she and her husband were members. Ka-ching ka-ching! This would all add up to thousands that Annie doesn’t have, and while Sophie makes good money as a financial advisor, she doesn’t want to spend it so lavishly.
A gift with a cost? Or an unwanted gift?
John and Juliana moved to Canada from Poland 30 years ago. They were very frugal and at times each had two jobs, to allow them to give their only son all the advantages in life that they didn’t enjoy. They scrimped and saved and bought a small house, and then bought another as a rental property. Fortunately for them, they found a great tenant, charged a very fair rent, and the tenant lived in the house for 22 years. Last year he moved out, just around the time that their only son, Josh, was getting married. So, they decided to give Josh and his new wife the house as a wedding present. Then the problems began. The house needs major repairs. Christine had just purchased an apartment downtown a few months before the engagement and wanted to stay in it. But more problematic was that to gift the couple the house, the capital gains tax on it would be over $250,000, an amount that they simply did not have.
I don’t need a will – I don’t have anything of value
Here’s a common phrase we’ve all heard …..and possibly the reason why a high percentage of people in Canada don’t have a will. Why is this belief so common? Some thoughts on this…
You own your home and have for many years. It’s free and clear. It may be worth much more than you think. In any case, it is a valuable asset. If you don’t have a will that specifies what happens to it on your passing, the government will ensure that it is sold on your death, and probate and other taxes will apply. Or what if you’ve bought a house? Even if it has a high mortgage, it’s likely worth more than the down payment that you made, so there is some equity in it.
Do you have some art on a wall you’ve forgotten about or don’t realize it is of value? Find out what the market value is, and then decide what its future will be.
You might think that you don’t have any jewelry of value, but what about your wedding rings or those pearl earrings you wear constantly? Or your mother’s special diamond and sapphire necklace?
Maybe you’re young and think you haven’t acquired anything worth including in a will. Do you have young children who need to be provided for and need a guardian if their parents are no longer around? James and Nicole made out their will when their daughter Emma was born and included his sister and her brother as guardians. These two guardians live 4000 kilometers away from each other and have never met. Logical solution? NO!
An unfortunate turn of events can create a problem. Andrew was involved in a tragic work accident at the age of 38. He survived but has major brain damage and can no longer work or communicate clearly. He thought he was too young to need any of these documents. He and his ex-wife have 2 children and have no wills and no life insurance. How will he be cared for, and what does he leave for the kids?
All of these and many more reasons tell you that you do indeed need a will!
Do you actually own the items in your will?
Eric and Lily, a husband-and-wife team of 57 years, had wills that they updated several times over the years. Eric was 10 years older than Lily, and after a very brief illness, he sadly passed away. In his will, he left the family computer to one of his adult children. But wait, the wife is still using that computer and it is really family property, so not solely the husband’s to gift! And there’s more. The will also leaves two very valuable pieces of art to another adult child, but that art actually belonged to their oldest daughter, and was on loan to the parents, even though it hung on a wall in the family home. Further, Eric’s will leaves the family piano to another adult child. This is the piano he gifted to his wife a short time ago, so again, it was not his to give. He didn’t even play piano – Lily was the musician in the family.
So, if you have joint possessions, they are not solely yours and therefore should not be willed to others. This would leave the surviving spouse in a dilemma.