Do you need a will if you only have one child? That depends - how much do you like that child?

Last night, while giving a seminar, I was asked a surprising question by an audience member that I'd like to share with you readers today. As I often do in seminars, I had spent some time talking about ways to prevent disputes among siblings when a parent loses capacity or passes away. The question asked of me was "what was the point of your parents having a will if you're an only child?"

I suppose it's not surprising that people think that way. After all, they usually have had no exposure to trying to deal with financial assets and taxes without the written permission of the owner. They don't know how difficult it is and how much more it costs when someone tries to deal with matters in the absence of a will. The idea still prevails - wrongly - that because you are someone's son or daughter, the legal and financial worlds are automatically going to let you deal with your parents' assets.

This is not to say that every estate is complicated. There are people whose entire net worth is found in one bank account that they hold jointly with their only child. That's about as simple as it can get in terms of estate assets. but for most people, it's just not that easy.

Certain kinds of assets, as well as assets of a certain value, cannot be sold or transferred unless the child has proper legal authority. In many cases, that authority can only be gained by applying to the court for Letters of Administration. Any reader who has tried to gather information for the inventory portion of the application will appreciate how hard it is to get any information at all due to privacy regulations. It's a hundred times easier and faster when there is a will appointing you as executor.

Applications for Letters of Administration are not only very frustrating, they may also be more costly than an application for Probate would have cost for the same estate. In some provinces, such as the one in which I live, a bond is required on every application for Letters of Administration. The cost of the bond is based on the value of the estate and runs into the thousands of dollars. In other words, more than the cost of an application for Probate, and way more than the cost of doing a will in the first place.

In addition, the transfer of various assets is more complicated without a will. For example, yesterday I dealt with a widow who was trying to transfer her husband's shares of a publicly-traded company to herself. We prepared a package of documents for the transfer agent. She paid a fee to the transfer agent based on the value of the shares but was required to pay an additional $125 for extra processing because there was no will. This is only one example. In many estates, the fees of $150 here and $250 there add up very quickly. Every institution that touches the financial assets without the protection of a Grant of Probate covers its own risk by charging a fee.

So is there a reason to have a will if you only have one child? That depends on how much you like the child. If you feel like making the child's life difficult, frustrating, and costly, don't make a will. Let your child navigate the legal and financial institutions with no help from you.