Making plans as an individual can be quite different from making plans as a couple. All of a sudden your usual go-to person is not available and you have to involve others in your legal affairs. It can be much more complicated and sometimes upsetting, and not surprisingly, many of us put it off.
Here is a list of 8 important things for you to think about:
1. Update the title to your home and cottage. If you and your spouse owned the property as joint owners, you now have the right to own it as sole surviving owner. However, this does not happen automatically. The Land Titles Office won't take any steps to remove your spouse's name if you don't submit paperwork. This is more important than people realize, because the failure to remove the deceased spouse's name will likely mean that your executor will have to probate not only your will but your deceased spouse's will as well.
Many people like to downsize their homes once they become widowed. If this is what you decide to do, you will have to remove your spouse's name from your home before it can be sold. If you decide to deal with the cabin, do NOT put the cabin in the joint names of all of your children. Talk that through with your estate lawyer and you will clearly see what a terrible idea it is. Your lawyer should be able to present you with some options.
2. Check on life insurance beneficiary designations. You may have named your spouse as the person who would receive your life insurance proceeds on your death. Now that your spouse has passed, you may be wondering whether you should change the designation. If you don't change the designation, on your death the policy proceeds will be paid to your estate and be distributed under your will. If that's what you want, there is no need to make a change.
Having your insurance proceeds go into your estate rather than directly to your children may provide the funds needed to pay capital gains tax on a cottage or revenue property. Even if the funds are not needed for cash creation, there may be advantages to having them distributed to your children as part of your estate, if your will contains trusts for the children or grandchildren.
3. Consider RRSP or RRIF designations. Most likely, you will have named your spouse as the beneficiary of your plan, since there is a distinct tax advantage to doing so. Without a spouse, there is no equivalent tax treatment available to you. At this point in time, many widowed people decide to name their children as the beneficiaries of the policy. Before doing that, it's a good idea to talk through the options with your estate planner to make sure you understand the tax implications,
4. Update your will. Your existing will most likely names your deceased spouse as your executor. It's now time to re-think who should be named to take on that role. Many people will choose one or more of their children, but also consider a trust company if you have any concern at all about the burden you may be placing on the kids, or about squabbles between them. Talk through your options with your estate planner, and be realistic about the abilities and attitudes of any of your children that you are considering for the executor role.
If you own a pet, you may wish to make some arrangements in the will for the pet, since your spouse will not be around to take care of it.
5. Update your incapacity documents. As with your will, you are going to have to revise your choice of representative for both financial decisions and health-care decisions. Resist the temptation to name all of the children to all of the roles, and give some real thought to who can best do the job the way you want it done.
6. Update your private pension plan. Make sure you contact any pension plan to which you or your spouse belong, to let them know about your spouse's passing. You will be asked about who should be named as beneficiary of the pension plan if there is a benefit that will pay out on your death.
7. Update your joint bank accounts and investments. If you and your spouse held non-registered accounts together, advise your bank or financial advisor of your spouse's passing. It is not difficult to have the name on the account changed while you are alive, but it may become problematic if you pass away yourself while your spouse's name is still on the accounts. In addition, it's important for tax reasons that income on the accounts be allocated to the proper person.
8. Start preparing a written list of your real estate titles, insurance policies, accounts, prescriptions, doctors, safe deposit box locations, passwords, and other vital information. You may find it convenient to use a booklet published for that purpose (click here to get one). This will be very helpful to your executor when the time comes, but it may also be a Godsend if one of your children ends up acting under a power of attorney on your behalf.