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Sunday, May 9, 2010

Making sure everything works together

Most people believe that if they make a Will, the document covers everything they own. This is only partly true, and it's important to understand how your Will works together with the other arrangements you've already made, or will make in the future.

What does your Will cover? It covers everything you own in your own name, including your debts.

What doesn't it cover? The first kind of property that is not covered by your Will is anything that has a designated beneficiary. This means plans such as RRSPs, RRIFs, LIRAs and pensions. It also means life insurance policies where you have named someone to receive the money on your death. These things are not included under your Will because you have already made a contract with the insurance company or bank that the money will go to a certain person.

(As a side note, an RESP does not work the same way, but that is a subject for another day.)

Your Will doesn't normally touch those items, unless it is drafted specifically to address them. An exception is that your life insurance is covered by your Will if your beneficiary named on the policy is your estate.

The second kind of property that is not covered by a Will is joint property. The joint property that most people are familiar with is the joint title to their home, or a joint bank account. Your Will doesn't touch these assets because joint title is a legal arrangement whereby the surviving owner takes the entire title by right of survivorship. This is why I always refer to joint ownership as a "last man standing" arrangement.

This is why your lawyer will ask you several questions about your other assets and how they are held. You have to be sure that everything - Will, beneficiary designations and joint assets - works together so that your estate ends up the way you want it.

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