Introduction
Creating a Will is a commendable step in securing your estate's future. However, it’s equally important to ensure that your Will stays relevant as your life evolves. According to Domenic Tagliola, a Tax and Estate Planner at TD Wealth, updating your Will is a continuous responsibility. Significant life events or legislative changes could render an outdated Will ineffective, leading to conflicts, delays, and unintended hardships for your loved ones.
Here are five crucial occasions when you should re-evaluate and update your Will:
1. When a Child Turns 18
Once your children reach the age of majority, they can legally inherit assets as adults. However, transitioning from a guardianship setup for minors to an adult trust structure may be prudent. Setting up trusts for adult children can ensure that large sums of money are distributed responsibly and are safeguarded from creditors or personal disputes, such as divorce.
2. When Executors or Administrators Are No Longer Suitable
Your original choice of executors, trustees, or guardians may no longer be the best fit due to age, health, or personal circumstances. If your designated executor is no longer capable of handling the responsibilities, consider appointing a new executor or even a professional trust officer. Professional executors bring expertise, impartiality, and experience to estate management, reducing the potential for disputes among beneficiaries.
3. After Marriage, Divorce, or a New Relationship
Family dynamics can shift significantly due to marriage, divorce, or common-law relationships. Laws governing estates and family rights vary across provinces, so it’s vital to adjust your Will accordingly. For example:
- Second Marriages: Ensure provisions are made for children from previous relationships.
- Common-Law Relationships: If not legally recognized in your province, update your Will to protect your partner’s inheritance rights.
- Divorce: In Canada, divorce no longer invalidates a Will, but updates may be necessary to reflect your new intentions.
Failing to address these changes could result in unintended beneficiaries inheriting your estate.
4. Upon Retirement
Retirement often marks a significant change in financial circumstances. It’s an excellent time to reassess your Will for tax planning, such as reducing estate taxes or probate fees. Consider gifting assets to family members during your lifetime or including charitable donations in your estate plan to leverage tax benefits. Aligning your Will with your new financial situation ensures your legacy supports your loved ones and philanthropic goals effectively.
5. When Laws or Regulations Change
Changes in tax laws, probate rules, or other estate-related legislation can impact your estate plan. For instance, recent Canadian legal updates clarified that divorce no longer invalidates a Will. Such legislative changes necessitate revisiting your Will to ensure compliance and alignment with your goals. A periodic review every three to five years is also recommended to verify that your Will reflects your current wishes and priorities.
Keeping Your Will Relevant
An out-of-date Will can inadvertently create family discord, particularly if the values of assets have shifted over time. For instance, if a cottage willed to one child appreciates significantly more than a stock portfolio willed to another, the disparity may cause resentment. Regular updates to your Will ensure that your estate is distributed fairly and as intended.
By periodically revisiting your Will and aligning it with current circumstances, you can minimize conflicts, optimize tax planning, and ensure a smooth transition of your assets to the next generation.
If you have questions about updating your Will or would like professional guidance, consult an estate planner or legal advisor to safeguard your family’s future.
This article is written for educational purposes.
Should you have any inquiries, please do not hesitate to contact us at (905) 836-8755, via email at [email protected], or by visiting our website at www.taxpartners.ca.
Tax Partners has been operational since 1981 and is recognized as one of the leading tax and accounting firms in North America. Contact us today for a FREE initial consultation appointment.
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