Everyone has a will whether it is one they had prepared or one under the statutes that govern estate distribution. It is better if you have your own. There is a chance it will reflect your wishes. That of course, does not preclude errors in the will.
Here is one that while rare is not unheard of. A problem with leaving specific assets.
There are two reasons you should reconsider that
Let’s do a simple will. I have three assets. A rental property worth $1,000,000, an RRSP worth $1,000,000 and all other assets worth $1,000,000. I have three children Allen, Betty, and Charlie. I want Allen to have the business, Betty to have the RRSP and charlie to have all the rest. What happens.
Allen gets the rental property at $1,000,000 and I am deemed to dispose of it at fair value on my death. There is a capital gain of $600,000 and recaptured capital cost allowance of $100,000. $400,000 hits my final tax return
Betty gets my RRSP at $1,000,000 and $1,000,000 hits my tax return.
Charlie gets what is left, nominally worth $1 million, but there is the income tax on $1.400,000 to deal with. The estate owes right around $750,000. Charlie gets $250,000.
Is Charlie happy? Probably not. Would there be a dispute, possibly litigation? Probably.
Allen and Betty could pay the tax on what they got but that doesn’t work either. Allen pays the tax on his property $220,000 leaving about $780,000 in value. Betty pays the tax on her inheritance $530,000 leaving $470,000. Charlie does nothing and keeps $1,000,000. Is there a lawsuit? Probably.
The key point is the estate was never $3,000,000. Always provide for taxes, probate costs and specific outside the family bequests before deciding on the distribution.
Parent owned a life insurance policy paying $750,000.
Leaving specific assets can cause unforeseen problems
Too little liquidity means executors must sell something or borrow. Both tie up the estate longer than needed and noth cost something.
Think costs through carefully and provide for them.
I help people have more income and larger, more liquid estates.
Call or email email@example.com or in Canada 705-927-4770