Estate Planning: When There Isn't a Will… What is the Way?

TD survey finds Canadians are unprepared for the inevitable: half admit they do not have a will

TORONTO, May 24, 2017 /CNW/ - Creating a will can be an emotional experience, however not having one can cause greater emotional turmoil for those left behind. Surprisingly, according to a new TD survey, half of Canadians (50 per cent) do not have a will, a crucial step in allocating assets after death. The survey also found that more than one quarter (28 per cent) of Canadians without a will are between the ages of 53 and  71, and complicating matters even more, 39 per cent of them have not discussed estate planning wishes with their children.

"Estate planning is an essential step in making sure your assets are managed as you wish after your death," said Rowena Chan, Senior Vice President of TD Wealth Financial Planning. "If you do not have a will, it can create a lot of conflict and unnecessary animosity amongst family members during an already difficult time – regardless of how much or how little you plan to leave behind."

With most Canadians (88 per cent) having at least one sibling, family conflict over inheritance is common. The TD survey also found that one in five (19 per cent) Canadians who received a family inheritance say they experienced conflict with their siblings and other relatives over the division of those assets, with two in five (41 per cent) saying they considered taking a smaller share of the inheritance to maintain family harmony. Inheriting family property (45 per cent) and cash investments (39 per cent) were the top two causes for conflict.

"In Canada, if you die without a will, your assets are distributed according to the laws of the province in which you lived, using a set formula to allocate your estate to your spouse, children or other relatives, which could be different from what you really wanted," said Chan. "Even if you do have a will, you need to keep it up-to-date so that it accurately reflects your existing assets and any changes that may have occurred in your family or financial situation."

Of Canadians who have experienced conflict over family inheritance, 13 per cent said it was over a family business. Nearly half of these Canadians (46 per cent) say it was because of differences on whether to keep or sell the business, and about one in four (27 per cent) say it was over whether to make significant changes to how the business was run.

While one may think estate planning is necessary only for those with significant financial assets, the reality is that estate planning is essential for everyone, regardless of the value of property or other assets. TD offers the following tips to help plan your estate, manage potential tax implications and avoid possible family conflict:

Personal property: Items like the family home, summer cottage or jewelry are all considered property assets, regardless of what they're worth. A professional appraisal is an important starting point for valuing these assets. Once you understand the dollar value, you can get a sense of how to distribute them among your loved ones. Check online to find a listing of local appraisers or ask your lawyer for a referral. Keep in mind some items may mean more to some family members than to others. Something that you may have strong feelings over, like the family cottage, may not have the same sentimental value for your children. It is important to discuss property with your family members to understand their sentiment and get a sense of whether anyone has strong feelings associated with any property. You can then factor these sentiments along with overall value into your estate planning decisions.

Cash and Investments: Since these assets are measured by monetary value, it can be relatively straight forward to divide them among loved ones. In Canada, money received from an inheritance is not considered taxable, but a deceased person's estate has to pay taxes on any income, including investment income, before money can be distributed to beneficiaries. It is important to review these assets to understand their value and tax implications.

Family Business: Succession planning should be a priority for anyone who owns a family business. Having a plan that outlines what should happen with the business can help to ensure a smooth transition, whether that means transferring ownership to the next generation, selling the business altogether or something else. If you intend for specific family members to inherit or to run the business, the designated successors should be involved during the succession planning and implementation process to ensure they are comfortable taking over and the family business to help ensure its continue success.

Regardless of the type of assets you hold, Chan recommends that you review your estate plan at least every three to five years or when a significant life event occurs. There could also be changes in marital status for you or your children, the birth or death of a family member, or a change in your employment status or financial situation that may require you to update your plan.

"The value of your assets is measured by more than the dollar amount," said Chan. "Family members may have memories associated with certain items that make them more valuable than any dollar figure. It is important to consider these emotions when distributing your assets among loved ones. A financial planner can help you navigate these considerations to ensure you have a plan that works for you and your family."

For more information, tools and resources, visit https://www.td.com/ca/products-services/td-wealth/financial-planning.jsp

About the TD Survey
TD Bank Group commissioned Environics Research Group to conduct a custom survey of 6,020 Canadians aged 18 and older. Responses were collected between February 9 and 16, 2017. All fieldwork was performed by Environics' wholly-owned subsidiary, maintaining strict quality control procedures in accordance with guidelines established by the Marketing Research and Intelligence Association (MRIA).

About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group ("TD" or the "Bank"). TD is the sixth largest bank in North America by branches and serves 25 million customers in three key businesses operating in a number of locations in financial centres around the globe: Canadian Retail, including TD Canada Trust, TD Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD Insurance; U.S. Retail, including TD Bank, America's Most Convenient Bank, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in TD Ameritrade; and Wholesale Banking, including TD Securities. TD also ranks among the world's leading online financial services firms, with over 11 million active online and mobile customers. TD had CDN$1.2 trillion in assets on January 31, 2017. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.

About TD Wealth
TD Wealth represents the products and services of TD Waterhouse Canada Inc., TD Waterhouse Private Investment Counsel Inc., TD Wealth Private Banking (offered by The Toronto-Dominion Bank) and TD Wealth Private Trust (offered by The Canada Trust Company).

SOURCE TD Wealth

For further information: Emily Vear, TD Bank Group, 416-983-2132, emily.vear@td.com; Faye Anderson, Hill+Knowlton Strategies, 416-413-4562, faye.anderson@hkstrategies.ca

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