Aretha Franklin died last week on August 16th at the young age of 76 without a will or trust. The Queen of Soul was reportedly worth US$80 million but the true value of her estate isn’t yet known – mostly because her song catalog hasn’t been appraised. R e s p e c t!
Aretha’s four sons will likely share the estate, but other claimants could emerge from the cracks - and she may have had creditors. The lack of a will means the state of Franklin’s finances will become public knowledge in probate court. Meanwhile, the estate could keep growing: Franklin's songs were streamed 57 million times in the four days after her death – I, myself even contributed to that streaming over the weekend during an impromptu dance party with friends.
The notion of estate planning is all too familiar, yet we’re ‘surprised’ every time a celebrity passes away intestate (most recently Prince but also recall Bob Marley, Kurt Cobain, Jimi Hendrix, Sonny Bono, James Brown and Michael Jackson), because we think, ‘how could someone with such an empire not have a Will?’ Thing is, we all need a will, no matter how simple or complex you think your affairs might be.
A will is an item on all of our endless ‘to-do’ lists – and something that I am constantly reminding my clients to address during our planning meetings – but for some reason or another, according to this article, 51% of Canadians do not have a signed Will in place, despite acknowledging how important it is to have one. Even more drastic is the 88% of Canadians ages 27-34 who don’t have Will because they believe they are too young. My professional advice to people who fall into this category is that while you think it might be obvious who gets your “stuff”, who you want to settle your estate as Executor is not obvious (it’s a privilege and burden to be appointed) and even more important is appointing your Powers of Attorney (POA), both for health and property because these would be important decisions being made on your behalf by someone while you are still alive.
Not addressing this daunting “to-do” item can cost thousands of dollars in legal bills and bitter family disputes. When you die without a will, you are said to die ‘intestate’.
Dying intestate means that:
• You can’t choose who your beneficiaries will be;
• You can’t choose who will administer your estate;
• You can’t plan your estate to minimize taxes;
• You can’t choose a guardian for your children.
• Simply put, this means that your provincial government decides how your assets will be divided - not you.
Will Planning is a large part of the estate planning advice my team and I provide, so for those 51% of you who may not have your Will in place, here are some of the major consequences of dying without a Will:
1. Many people incorrectly assume that if they were to die without a Will their estate would simply pass to their spouse. However, this would only happen for assets that were held jointly with right of survivorship with the spouse (except for in Quebec).
2. Depending on your province, your spouse will receive a preferential share of your estate, ranging from the first $40,000 to $200,000. The balance of the estate is divided among your spouse and children.
3. Most provincial intestacy rules do not recognize common-law spouse status, so he or she may be left out of the estate entirely.
4. Without a will, you are unable to appoint an Executor or Powers of Attorney
5. The Public Guardian (the government) will be involved in the selection of guardians for any minor children you may have. This person would be responsible for your children's physical care, health care, education and general well-being until they reach 18 years of age (19 in some provinces). If you don't name a guardian, there may be dispute among family members as to who is best suited to act as guardian, resulting in a need for court or provincial government involvement.
6. Your burial preferences are unknown.
7. In the event of a common disaster (where your whole immediate family passes away), your estate may go to a relative that you may have never spoken to, or don’t even like. Instead, you could include provisions to create a legacy through charitable gifting.
8. Ultimately, without a will, you are unable to exclude or include beneficiaries (such as your favorite people, organizations, causes and even pets) and valuable artifacts or family heirlooms you intend to pass along.
Despite all of this, many people never get around to making their Will, which can result in costly litigation and additional emotional pain for loved ones—which is unfortunate, because making a Will can be simple and inexpensive.
In Canada, there are three basic types of Wills: a Formal Will, a Notarial Will and a Holographic Will. If you fall into the 49% of Canadians who do have a Will, you’re ahead of the gang but need to ensure that you are updating your Will regularly. Most legal professionals recommend reviewing your estate plan every 3-5 years or any time you experience a major life event – such as getting married, divorced, starting, buying or selling a business, the birth of a child, the death of a spouse or changes to your financial position, to name a few.
Click here to request a handy Will Planning Guide to get you started, that said, your Will should be prepared within the context of an overall estate plan to ensure that all elements of your current situation are addressed and that your estate objectives are met.
Now you are in-the-know with Word on the Street.
Enjoy the weekend,
Investment & Wealth Advisor
Chaaban Wealth Management Group