Life is full of surprises, making it exhilarating most of the time. However, planning for significant moments, those that can potentially disrupt your family’s life, is crucial. Safeguard your children’s future with a will. Here are five reasons why incorporating a will into your life plan is essential:
- Guardianship Appointment: Your will provides the only opportunity to designate a guardian who will have custody of your children if something were to happen to both you and your spouse. While the appointment is initially temporary for 90 days, it serves as a crucial first step toward permanent status.
- Gifts to Minors: Minors typically cannot inherit property directly. Without a will, if your child automatically inherits according to default rules, the money may be tied up in court until they turn 18. Establishing a trust in your will allows for proper management of the funds, setting terms for disbursement to support your child’s needs before reaching adulthood.
- Set Ages for Inheritance: A will enables you to determine the ideal age for your children to receive a windfall life insurance payment or inheritance. By creating a trust in your will, you can postpone the payout age (e.g., 25, 30) or stagger distributions to ensure financial support at different stages of their life.
- Beneficiary Designations: Many new parents have life insurance, RRSPs, or TFSAs with the other parent as the primary beneficiary and the children as alternate or contingent beneficiaries. Failing to address these designations for underage children can pose significant problems. Allocating the funds into a trust for the children offers maximum flexibility and should be a critical consideration addressed by a knowledgeable wills and estates lawyer.
- RESPs: Contrary to popular belief, RESPs are not trusts for your children; they are usually the property of the subscriber (typically the parents). Without a will, they might be terminated and absorbed into your estate. However, your will can stipulate the continuation of the RESP for the benefit of your children, aligning with most parents’ preferences.
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