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Sunday, November 6, 2011

10 Steps to the Will You Want and Need

We've all seen those newspaper articles about celebrity estates gone wrong, and we all know of someone in our own lives who is dealing with a nightmare estate. In the majority of these cases, there was either no will made by the deceased, or there was an insufficient will. By that I mean a will that simply left too much opento interpretation or failed to address important issues, or simply left the wrong people in charge.

How can you avoid this trap? How can you avoid leaving a legal, financial and emotional mess behind for your spouse or kids to clean up? Follow these ten steps to create your most bulletproof will:

1. Decide what's most important to you, whether that is keeping a farm in the family, or ensuring that your children will be able to access their inheritance to go to college. Talk about your plans with your spouse or partner. Tackle the tough issues, such as what to do about children from previous relationships, or about a child with an addiction.

2. Do your prep work, Prepare a list of your assets including your home, cottage, rental properties, life insurance, RRSPs, pensions, savings accounts etc. Know ballpark values for the assets. Understand how each of these assets is held (e.g. in your name alone vs. in joint names).

3. Find a lawyer who specializes in wills. Thinking that your nephew who works exclusively in mergers and acquisitions, or your neighbour who does criminal law can or will do the same job as a wills specialist is one of the most frequent errors made.  They'll probably do the job for you as a favour, but you're better off if they don't. Find a lawyer through word of mouth or by calling the provincial or territorial bar association.

4. Have an interactive discussion with the lawyer. Describe your goals and your concerns. Be frank about problems or rifts in the family. Listen to suggestions and advice. If, for example, the lawyer advises against leaving your home to all four of your children, ask why. Understand the advantages and pitfalls of the ideas you came in with and those suggested by the lawyer. The wills lawyer should do an overview of all of your beneficiary designations and joint property arrangements as part of the process, and should also alert you to the likely tax consequences of your arrangements.

5. Choose your executor carefully. If you've clarified your goals and you know what is in your estate, you should have a pretty good idea of the job your executor is going to have to do. Who is the best candidate for the job? Consider using a trust company if you need a neutral third party, if you don't have a suitable family member nearby, if you want to spare your kids the headache, or if you have even the smallest concern about your family members having the time, patience, tact, honesty and expertise required.

6. Ask your executor if he or she is willing to do the job. No exceptions.

7. Ask to have a draft of the will and other documents sent to you for review before you sign it. This way you can take your time and read it at home. Make sure you understand what each clause means, and ask the lawyer for clarification if there is anything you don't understand.

8. Make absolutely sure that your will works together with all of your other legal and financial arrangements. For example, don't bother leaving your house to someone if you currently own it jointly with someone else, because the joint asset won't fall into your will. Make sure that the beneficiary designations on your RRSP, RRIF, life insurance and pension don't contradict your will. Understand the effect any divorce documents, separation agreements or child support orders will have on your estate.

9. Back up your will with strong, effective incapacity documents, i.e. an Enduring/Continuing Power of Attorney and Personal Directive. Many a will is ruined when a rogue Power of Attorney spends or wastes the money before the testator even passes away. In cases like that it makes no difference how strong the will is, because the estate has already been dissipated.

10. Use other professional help if the lawyer recommends it, or you simply want the extra back-up. An accountant is the best person to talk to about possible tax on your estate. A life insurance broker can do a review of your current policies and give advice about changes. A financial planner or investment advisor can prepare a full plan that projects your financial picture into the future.

If you follow these steps, you should end up with a will that truly reflects your wishes and intentions, and is strong enough to stand in your place after you've passed away. Though it takes a bit of work on your part, you will have peace of mind knowing that you've done all you can to protect your family.

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