9. Do I really need a will? An interview with Elizabeth Williamson
Transcript:
Evan Neufeld: Hello, and welcome to episode 9 of the Canadian Money Roadmap podcast. I'm your host, Evan Neufeld. On this episode we're going to be discussing wills with my guest, Elizabeth Williamson, a lawyer here in Saskatoon, specializing in wills and estates. We're going to talk about why you should have a will and some things to keep in mind when making your own succession plans. Elizabeth, thank you for joining me today.
Elizabeth: Glad to be part of your podcast.
Evan Neufeld: So first things first, in our industry we deal with a lot of clients that may or may not have a will. When we deal with money, having a will can be very important. From a legal perspective, you probably have a clearer, or perhaps a more accurate answer as to why you need a will. So maybe we should start there. Why does someone need a will.
Elizabeth: So a will makes everything easier. If you don't have a will, you just hit roadblocks all along the way. No matter who passes away, whether you have lots of assets or few assets. If you're an adult, you should have a will.
Evan Neufeld: Lots of assets or no assets, you should have a will. Say on the not many assets side of things, what happens if I don't have one? What are some of those problems that someone might run into?
Elizabeth: In Saskatchewan, if you do not have a will, there's an act that takes over and says who gets what. It's called the intestate succession act. Someone who makes a will is called a testator. Someone who doesn't make a will intestate succession act, and it sets out who gets what. So often, if someone's married, that it will go to their spouse an if all of their children are both of their own children. If you're married and you have a mingled family, there's different rules that govern that. If you're single and have children, it will go to your children. If you're single without children, it goes to your parents and then it goes on and on from there. Even if you don't have assets there’s difficulty any time you're dealing with the bank or the government. If there's a will and the question is, can I have a copy of the will. You pull out the will, you provide them with a copy, and they have what they need. If there's no will, then there's roadblocks. Depending on how much value is in the person's estate, if there's a lot of value, you have to go have someone named as an administrator, without a will. And then you have to follow the intestate succession process. If you don't have enough assets to require that, often banks or institutions will still require someone to show why they are the best person to be doing this. Either they're married or they're a parent or something like that.
Evan Neufeld: So it just adds an unnecessary layer of complexity. That after the loss of a spouse or a loved one in some capacity, you just don't want to be dealing with that type of complexity when there's enough complexity of its own.
Elizabeth: Yeah, absolutely. So often we think of wills as something that we're doing for ourselves, but really a will is something that you're doing for your family, because they are the ones who are left after you pass away. They're the ones who are dealing with your estate and the simpler you make it for them, the better it will be for them. So this is like a gift to your family to make a will.
Evan Neufeld: That's a good way of putting it because most people will want to leave their assets to their children, as something to pass along to the next generation. But, there's got to be some analogy here of giving them a snake in the other hand kind of thing, if you don't have a will.
Elizabeth: And also it can cause a lot of problems because it's the government through an act that's saying who gets what? It's not the testators wishes that are being followed. So if you really want someone like a friend or an organization like a charity or some other situation that isn't the defined list under the act, you need to have a will.
Evan Neufeld: These days in particular, everything can be done online. We've had this conversation off the microphone here, but when people are trying to do more things online and more do it yourself approaches, doing a will online seems like an easy thing to do. You say, okay, this goes to my sister, this goes to my brother and so on and so forth. Then you just sign on the dotted line and so be it. My understanding is that's not quite the case and you can get to a bit of trouble doing an online will. Could you maybe go over some of the items that you'd want to consider using an in person lawyer for, instead of doing a will online.
Elizabeth: So first I want to say most often, at least here in Saskatchewan, you can have a will drafted for you somewhere between $250 and $500, maybe a little bit more per will, unless you have a very complex situation, but that isn't actually very much. When it comes to looking at what your whole estate is worth. It's a small proportion of your whole estate to have a lawyer help you do your will so it's done correctly. If you do a form online, you have to make sure that it's validly fine. So there's rules, here in Saskatchewan and in other provinces, as to how your will is supposed to be fine. And you have to have at least two witnesses, they have to both be present at the same time, they should be over 18, neither of them should be inheriting under the will or a spouse of someone who's inheriting under the will. There's a lot of details that you just want to make sure are correct. Then secondly, we're finding with the baby boom group and the value of houses and farms these days, a lot of people have quite large estates over a million dollars often. If you don't deal with that appropriately through a properly drafted will, you may be running into a lot of tax consequences that you hadn't planned on and you're basically giving a lot of money to the government that you may not have had to give. And thirdly, we find that there's errors made very commonly, when doing form wills and it's just creating work for lawyers because these form wills are getting litigated and you're just making lawyers rich, I hate to say. Because what someone thinks they are agreeing to or saying, sometimes the language is more complicated than what they realize and it means something quite different than what they thought. So then you have one person who is inheriting under one interpretation, challenging the will because they're saying, Oh, if my parents really understood what this said, they would never had signed it. It just creates more problems than it's worth for a service that lawyers provide at a relatively low rate.
Evan Neufeld: The thing that you mentioned there that really hit home for me, when we did our wills with you, is that the legal language actually is a separate language. And you're almost like a translator in that way and to the untrained or even semi trained eye, the legal language can appear to say one thing. When in fact it means the opposite. So having a lawyer, such as yourself, be the interpreter and creator of such a document ensures that those things are done as we and anybody else would want them.
Elizabeth: It's part of the experience with a lawyer. The way I do it is I have a very in-depth interview with my clients and explain how all of this different area of their estate pass on. So for example, an RSP goes differently than life insurance, which goes differently than a pension, which goes differently than, non-registered money. And so you also learn a lot and you can really understand and be comfortable with the plan that you've made, with respect to how you want your assets to pass on.
Evan Neufeld: So you mentioned investments there, do you typically work in conjunction with an advisor or a financial planner, like myself to build a cohesive plan for clients?
Elizabeth: Yes, so it really depends on the complexity involved in the investment plan or even their tax plan. I can work with accountants, investment planners, life insurance advisors, that's often done when it's a more complex or quite a high valued estate.
Evan Neufeld: That makes sense. Typically, people don't know when they're doing a will when they're younger that their future estate might be high value or not. And so things change, that's the nature of money and finance and time really. So as things change in people's lives, what are some of those trigger events that someone should say, now is the time where I should review my wills. So how often should one really review it and update it?
Elizabeth: As I said at the beginning of our discussion, everyone should have a will, but there's also these key milestones that people reach and that's when I find my clients come to me. When you get married, so you're combining your assets with your spouse, that's a very common time to make a will. In fact, if you've had a will and then you get married, your marriage nullifies your previous will, at least here in Saskatchewan. So that's a very important time. When you have children, often people come and have a will, you can name a guardian who would be the person who would look after your children, if both you and your spouse pass away in a common accident, for example, or if you're the last of the two of you to pass away, it's great to name a guardian.
Often when the kids grow up and leave the house. I find that my clients will come in and start to look at how they could do things differently. When the grandchildren come along. When people are an executor for the first time, for their parents often and they just realize things that they would like to do differently in their will or things that their parents did that they want to do in their will. I recommend my clients review their wills every five years. You don't have to change it every five years, but you should review it every five years just to make sure that it's still aligns with your current situation. Then there's those other things like divorce, triggers often the need to do a new will. In fact, in Saskatchewan, if you get divorced and if you've named your former spouse as your executor, it's treated as if your former spouse predeceased you. And so they're no longer your executor under your will, or they're no longer a beneficiary under your will, unless it's extremely clear that you meant for them to be a beneficiary, even though they are your ex spouse. So yes, there's those natural trigger points.
Evan Neufeld: Interesting. Those are a little bit of legal, fun facts there. I appreciate that. So you mentioned the word executors. So some of my listeners might not be familiar with some of the specifics of the language here, but my understanding of the executor in layman's terms might be say the quarterback of one's estate after someone passes away? Is there a better way to describe an executor?
Elizabeth: Yeah, so that's pretty good. The executor is the person who's given the formal authority to collect all your assets and then distribute them.
Evan Neufeld: Simple as that and in some cases, I guess it can't be simple. In other cases, it can be complex. So the ability to sell assets for cash or anything that may come along, that they need to do. They're the ones that have the sole and exclusive, In authority to do that.
Elizabeth: Yes, and it can be one person, it can be as many as three people. I really recommend fewer if it works for your family situation, but it really depends on what your circumstances are. A good executor is someone who is trustworthy, honest, organized and someone who gets things done. Often if you have a number of beneficiaries, like you have quite a large family, it's the person who gets along with everyone and it's just a natural born mediator.
Evan Neufeld: So there is a little bit of a relational side that you want to consider, or maybe that's one of the main things that you want to consider instead of maybe someone's comfortability with numbers, legal documents or things like that. The relational side might be more important to consider.
Elizabeth: It really depends on the family and it really depends on the circumstances of the family. If it's relatively straightforward, you have one or two children, you can name both of them as your executors or choose one of them. It would usually be the person who's more comfortable with numbers if they both get along really well.
Evan Neufeld: So when we talk about additional children or complex wills, the thing that I worry about or someone might worry about is that the more complexity that there is, is there a greater chance of it being challenged. So perhaps, how ironclad is a will and maybe what are some of those trouble spots or typical things that end up being challenged in a will if there are any typical ones.
Elizabeth: Now I'm going to give you a legal explanation here. So a will can be challenged here in Saskatchewan on a few different grounds. First is, it's validity. So it wasn't fined properly. I had already mentioned that there's a formal way to do it and maybe that process wasn't followed, the will can be challenged on its validity. I also want to say that here in Saskatchewan, we can still do a holograph will, which means a will that is absolutely all handwritten, dated and signed by the testator, the person who's making the will. That isn't filling in blanks of a printed form. The whole thing has to be handwritten and that's acceptable here. So the validity of the will, you can challenge a will on it.
A will can be challenged if there is a belief that there was undue influence. So that means if someone inappropriately influenced the person making the will. Then the will can be challenged on that. On those grounds, the will can also be challenged on due to lack of capacity of the will maker. So that's a person who doesn't have the mental understanding about what they're doing, what their assets are, who their beneficiary should be, and that sort of thing. There's also fraudulent Wills, right? So someone has forged a will and you can make a challenge that it might be a forged will.
And then finally there is the lack of understanding by the testator in that they signed something that they did not understand. That is a hard one to prove, but that could possibly be another ground. A will isn’t ironclad, there are ways to challenge it. The more that you do see a lawyer and have a lawyer make notes in the file, a lawyer can explain what you're signing, can try to draft it so that you fully understand it. They make sure it's validly signed and that there's no one in the room when you're signing it, that would be considered to be giving you undue influence and that you have the proper mental capacity.
So another really good reason to see a lawyer when you're making your will is because then the will is less likely to be challenged.
Evan Neufeld: Would it be fair to say then, on the same note, that it would be not only that you should have a will, but you should have a will as early as possible before say a physical or mental health decline happens and it's too late to make a proper will.
Elizabeth: Absolutely. It’s one of those things that we all say, ”Oh, I'll get to that, I'll get to that, I'll get to that.” And then something happens and it's too late. If I have a stroke or have some brain injury, something that no one ever plans to have, that can completely make it so that you cannot make a will thereafter. I also want to point out that after a will is made, if you haven't properly provided for your spouse or any minor children or any adult children who are dependent on you, then any of those individuals can bring a claim against the will, either under the dependence relief act or a spouse can also make a claim under the family property act. So it's important for a person who's making a will to really understand their legal responsibilities as to who to provide for.
Evan Neufeld: So even if you had a falling out or something like that, you might be obligated to provide for certain people, just by the nature of the law in the province that you reside in.
Elizabeth: That's correct. It really varies by province. But here in Saskatchewan for example, an adult dependent would be someone who has a mental or physical disability or by reason of need or some other circumstance like that they could really be seen as a dependent. But definitely all children under 18 and your spouse either by marriage or by common law are seen as people who you should be providing for.
Evan Neufeld: We've covered a lot of ground here on wills and I was hoping to mostly cover off the basics, but you've been generous enough to give me a bit more of your time on some more of the specifics. So that's a really great, but there's a couple other items that I was hoping you could just touch on quickly before we go. The Power of Attorney and a healthcare directive, these are things that people typically plan for at a similar time as their will. Can you compare and contrast what a will is with a power of attorney and what a healthcare directive is?
Elizabeth: I will give you a quick answer, but this may also be another podcast at some point in the future! Wills only operate once someone has passed away. If someone has one of those incidents that I was talking about earlier, where they lose the mental capacity to make their own decisions, then a will does not help at all because the person hasn't passed away yet. So instead the document that would be used in that situation is a power of attorney. And enduring power of attorney, which is a document that it has to be signed while you have the mental capacity. It’s very simple documentation and it sets out who you want to step into your shoes and you're giving them the power to be your attorney. Not your lawyer, but your attorney, meaning someone who is able to make decisions for you. That’s what a power of attorney is. In Saskatchewan, you can have one that deals with property, one that deals with personal matters of yours or one that deals with both. A health care directive here in Saskatchewan, is a document that deals with providing consent for health treatment and if you are unable to provide consent yourself because you can't speak or you're not making sense, then any medical provider has to look for consent from someone else, or look to a document like a health care directive. If it's an emergency, they can get two doctors to sign off on it and then they can provide the treatment to you. So a health care directive. deals with that. If you are someone who doesn't want certain treatments, and it's usually if you are in a situation where you may be in a vegetative state and you just want the treatment to be stopped and you'd be allowed to pass away, that's the sort of thing you would put in a health care directive. You also name someone as your proxy who can make healthcare decisions for you, if you are unable to make them yourself.
Evan Neufeld: You did a really good job summarizing there. I gave you the most complicated question right at the end and told you to make it simple, Sorry about that!
Elizabeth: That's fine!
Evan Neufeld: That's really good though, to understand that those things are available and necessary as well. I would recommend that those who are listening contact their lawyer that they use for their will and have that discussion with them as well. But I think that's probably all that I should really ask you for today. I think that's a really good overview of wills, why you need one and some things to keep in mind as well. Is there any final thoughts or things that you'd like to add?
Elizabeth: No, I think your questions were great. I think it gave a good overview. Thank you very much for letting me be able to participate on this podcast with you, I really appreciate it.
Evan Neufeld: Absolutely, Thank you so much!
Thanks for joining me today on the Canadian Money Roadmap podcast. If you enjoyed today's episode, I'd really appreciate if you left me a review on Apple podcasts with your biggest takeaway. If you have questions or ideas for topics you'd like me to discuss on future episodes, please reach out via my contact info in the show notes. This podcast is intended to be educational in nature, and you should always consult your financial, tax and legal advisors before making changes to your financial plan. Any rates of return discussed are historical or hypothetical and are to be used for educational purposes only. Evan Neufeld is Qualified Associate Financial Planner and Registered Investment Fund advisor. Mutual funds are provided through Sterling Mutuals Inc.