Here are 4 ways that having a Will can save you money…
1: Dual Wills
Let’s start off with a biggie: if you have a Professional Corporation (or any corporation for that matter) that has lots of assets in it, you can avoid paying estate administration taxes by having a corporate Will and a non-corporate Will. The corporate Will is never shown to the courts, so no taxes are ever paid on the value of your corporation’s shares. This technique has been challenged and upheld in Ontario courts. If your corporation is worth $1-million, then your estate would avoid paying $14,500 in estate administration taxes. Not bad for having two (2) Wills.
2: Avoid Legal Disputes
If you don’t have a proper/valid/up-to-date Will, your estate may get caught up in estate litigation, which will be costly. Wills can be challenged for a variety of reasons, such as the Will-maker not having testamentary “capacity” to make the Will, the Will not being properly signed in front of appropriate witnesses, or the Will-Maker was unduly pressured into putting something in/not including something in the Will. Make sure your bases are covered to help avoid litigation down the road for loved ones!
3: Transfer Gifts To Your Spouse/Dependent Child
The Income Tax Act allows you to transfer assets to your spouse or dependent child or grandchild on a tax-deferred basis upon death. This basically means that they would have to assume the tax liability, but don’t actually have to pay it until they sell the asset or die. If you give that same property to someone else (e.g. friend, cousin, uncle, etc.), your estate would pay tax on the disposition (i.e. sale) of that property. And without a Will, you can’t specify where your property goes. It’s based on government rules.
4: Designate Who Pays
Here’s an interesting trick. Let’s say you have a home and you want to give it to someone, but you want them to assume the mortgage (instead of having your estate having to pay it out, and thereby not having as much to go to the other beneficiaries who didn’t get the house). Well, in your Will, you can specify that if that beneficiary wants the house, they have to assume the mortgage that comes along with it. You just saved a whole whack of money that your other beneficiaries would indirectly have had to pay (i.e. your estate would have had to pay it before your beneficiaries received anything).