January 14, 2019
Why Do Property Owners Need a Will?
We get it. You’ve just bought your first home or closed on an investment property – maybe even your dream lakeside summer cottage, just a few hours from the city. You’re busy daydreaming about the perfect couch to sink into and that accent colour for your feature wall.
The last thing you want to think about is that ever-gloomy topic: what happens to _____ after I die.
We want you to enjoy your homes as much as you do, but if you haven’t thought about estate planning— no rug will be big enough to sweep the mess under.
3 Reasons Why
1 – Your will is how you legally appoint your Executor
Whether you own property or not, appointing your executor in your will is something every adult should do. Why do you need an executor? This is the person who can legally settle your estate (including properties you own) when you are no longer here.
The executors are given the responsibility and right to gather up estate assets, pay the deceased’s estate and divide the estate according to the deceased’s written wishes. Before choosing just anyone from your circle, make sure to talk to this person beforehand so they are not caught off guard.
A good choice for an executor would be someone who lives nearby, is well-organized and will be comfortable dealing with financial institutions and possibly lawyers and accountants. You should let them know what properties you own or at least where to find all the information they will need to make the process as smooth as possible.
When you pass away, your assets are frozen and some institutions will require certain documents before allowing access. Unless you have designated an executor in your will, they can remain frozen and inaccessible until one is appointed by the government which can cost time and money—not to mention headaches and possible disputes amongst your loved ones.
2 – Determine what happens to your mortgage
No one wants to die in debt or pass that debt onto their family. The good news is that in Canada, the mortgage stays with the home, not the person. That does not mean it goes away. It must be paid from your estate if you are the sole owner. In most cases, if you bought property with your spouse, they will take over the mortgage and the financial institution may reassess the terms depending on the situation.
If you have a property you would like to gift to a specific heir, it is important you make these wishes known in your will. Further, you will want to specify if you want the estate to pay off any debts on the property so the person inheriting it is free and clear if that is your intention.
This is why estate planning and financial planning go hand-in-hand and should be reviewed regularly. You’ll want to understand what types of debts will need to be covered and what your insurance policies will cover before you are able to divvy up your assets as you would like.
3 – Prepare for emergencies
You’re young, healthy and the end of the road may not yet register on your horizon—but accidents can and do happen. Beyond your Last Will and Testament you will want to prepare your Power of Attorney documents. While the label may vary from province to province, the intentions are similar: if you are incapacitated, who do you choose to speak on your behalf?
In Ontario, there are two types of powers of attorney – one for property and one for personal care. Your Power of Attorney for Property can make financial decisions on your behalf including paying your bills, managing your investments and collecting money that’s owed to you.
Having this in place can help you avoid your mortgage falling into arrears or managing investment properties if you’re unable to.
You cannot predict the future, but you can prepare for it
While it’s not a fun topic, estate planning is a necessary part of property ownership. These days, there are many options to help you complete these documents. Whether you decide to use an estate lawyer or a guided online estate planning service, the sooner you finish the quicker you can get back to the fun stuff. Only now, with a little more peace of mind.
Willful.co is an online estate planning service that guides users step-by-step to complete their legal wills and power of attorney documents. Willful’s software and template documents were created alongside seasoned estate planning lawyers. To see how Willful works, please visit http://willful.co.