Setting up bequests in your will can be tricky. How to decide who will get what after your death? For most people, their spouse will be the beneficiary of their estate, in order to ensure that he or she is able to maintain the same lifestyle until his or her own death.
But from there, where do you go? This article is not for people with great wealth, who probably have excellent advisors to help set up trusts, reduce taxes, etc. For most people, however, a few simple suggestions may be helpful:
• You may want to leave certain personal possessions to specific people who you believe will appreciate them: works of art, furniture, antiques, jewellery, silver flatware, china, valuable books. If this is the case, it makes sense to make a list of these items with the name of the person to whom you would like to leave them and put the list with your will. You may or may not wish to include such a list in your will. Your notary or lawyer can advise you on such matters. If you don’t make such a list, then your personal effects will likely be sold as part of your estate, probably at a rather low price that doesn’t reflect the sentimental value that these items may have for you and for your children, grandchildren, nieces, nephews or close friends.
• A museum or university may be interested in some things you own. If you think this may be the case, it would be a good idea to contact the museum, university or other organization while you are still alive to determine the level of interest, before making a bequest in your will. Most museums, for example, have formal acquisition committees that must accept bequests as part of their collection. Otherwise, such items would simply be sold or otherwise disposed of.
When making decisions about how much to leave to whom, it is also important to consider the probable difference between the current value of your estate and its value when you die.
Here’s an example:
Let’s say that today your estate would be valued at $300,000, a significant amount for average Canadians. So you write your will to include ten specific bequests of, say, $10,000 each, with the remainder to be divided among your three children. Let’s assume that you die ten years from now, having used up a fair amount of that $300,000 for your own living expenses. When you die, your estate is valued at $100,000. In such a case, the ten bequests (maybe to your church, a couple of community organizations, your university and your late spouse’s, United Way in your area and four other organizations) would consume the full amount of your estate, leaving nothing for your children.
This was not your original intention, most likely, so here’s a second scenario that may make more sense – and leave your children with at least some financial legacy. You could state in your will that, say, two-thirds of your estate should be divided among your children (or grandchildren or nieces and nephews) and that the remaining one-third of your estate should be divided equally among the 10 organizations to which you wish to bequeath something.
Many families have become estranged because of the outcome of a will their parents wrote many years before their death. It is important to try to think through various scenarios for your will with someone whose judgment you trust and who has had experience in dealing with such matters, before you decide how to formulate your last wishes. Few people want to create discord, but all too often this happens. And it is very sad.
Obviously, it is important to consult your notary or lawyer – or even your financial advisor – on such matters before finalizing your will. And remember to review it regularly to ensure that it continues to correspond to your financial realities and your current wishes.