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Nov 1, 2016

Where There’s A Will

by Ken Finkelstein

Ken FinkelsteinMy ten year old son, let’s call him Kid Baseball, plays Little League Baseball. His team, the Red Hot Chili Peppers, steamrolled through the spring season, and were one of six teams to earn a berth in the round robin finals tournament.

In that typical, beautiful kid fashion, he took it all in stride; this owed at least somewhat to adults who run the league and set the tone: it’s a game … these are kids … compete respectfully … learn team play … support your mates … relish the experience … winning is secondary … the primary purpose is play, having fun.

Under the tutelage of a coach who understood the value of letting kids be kids, and at the same time encouraging them to give it their all, the players morphed into a tightknit group of 12 who had a blast. Regardless of individual skill level, support was there, camaraderie on full display: cheering on each teammates turn at bat, playfully razzing the culprit for missing an easy pop fly, manically bouncing up and down and joyfully shouting while joined in team huddle after each game, win or lose.

As for me, I loved being at the games. Because when I’m watching Kid Baseball lap up life, immersed in an experience bigger than him self, contributing to the joy of others, I can’t help but feel sheer happiness for him, the other kids and their parents. Moments to treasure.

So there I am at the first game of the finals, leaning on chest high wire fence surrounding the field and looking at Kid Baseball who is supposed to be on his toes playing Right Field. Instead, he’s flat footed, gazing skyward, appearing to imagine clouds into various shapes and figures. Taking his cue (like Kid Baseball, like father), my mind sets off for a stroll. And I start thinking how amazing this all is, how fortunate Kid Baseball is to play on a grassy field in his spiffy uniform in a peaceful city in a caring neighborhood with supportive parents who brought this league into existence for the kids. Talk about a field of dreams. And I thought to myself, I did well, to have a hand in giving Kid Baseball this opportunity. But before I could dwell too long in self-congratulations, my mind tripped over to another direction, one that parents tend to follow come a certain middle age: what happens to Kid Baseball after I’ve checked out of Planet Earth and into the Great Gig in the Sky?

Giving Life To Your Wishes

Prince, the musician, recently died at age 57 without a Will. Poor financial planning? Yup. And this from a guy apparently worth several hundred million dollars with access to any estate experts he wanted. Prince should have known better? Sure, but I’m not here to throw dirt on a guy who’s prematurely six feet under. The point is, he didn’t bother. So be it.

Without a will, what happens to his assets? Short answer: assets are distributed to his heirs in accordance with governing laws. Unless stories printed in tabloid media rags of long lost heirs and Martian cousins sporting three eyes are true, the man had several siblings, each of whom will equally share in the estate. If other family members existed, the pie would be sliced in different proportions. For example, if he were married at the time of death, then his spouse would inherit the estate. If married with children, then the children would be entitled to a portion as well as the spouse, and the siblings would not inherit anything.

So if Prince didn’t have a Will, what’s the problem given that laws specify who gets what when a person dies without a will (known as dying ‘intestate’)? Practically speaking, since Prince is now jamming on some celestial cloud, it sure isn’t his problem. But, if he wanted his end to play out on a different note, there may be regret on his part.

A Will would have given life to his wishes, allowing him to shape his legacy, gifting assets to whom he wanted. Think about it: What if he didn’t want his siblings receiving any assets? Was estranged from one or more siblings and had no intention of leaving her/him a dime? Wanted to donate all or part of his estate to a charity or two or three? Leave some loot for friends? Fund a foundation supporting music?

All that could have been done with a Will, but not without. And by clearly stating who gets what, a Will potentially prevents legal disputes. Too many families are torn apart because of heirs, or people claiming to be heirs, with greedy eyes and watering mouths who choose to do harmful battle over their right to a bigger slice rather than seek peaceful compromise.

Gifting Without A Will

There is no need to transfer some assets via Will. Real estate may be jointly owned so, upon death of one of the owners, the property is then owned 100% by the surviving owner (known as ‘joint ownership with right of survivorship’). Bank and Investment accounts may also be owned jointly with right of survivorship.

Similarly, life insurance proceeds and retirement accounts may pass to heirs through beneficiary designation forms filed with your financial institution.

Big Crucial Note: it’s important to keep these forms up to date. For example, what if you divorced but still list your former spouse as beneficiary on your retirement accounts? Ka-ching! Jackpot for former spouse, who will be smiling on your passing because they will inherit your retirement account assets.

That said, different rules govern Registered Pension Plans (RPP). For those who are married, RPP assets are transferred to your surviving spouse. What if you have a so-called ‘friend’ on the side, whom your spouse does not know of, and you ticked a box instructing assets to be delivered to your ‘friend’ on your passing? C’est la vie. The friend gets nothing. All assets transfer to your spouse, because RPP rules take precedence. And when there is a divorce, the RPP is considered to be a marriage asset thus, like any other marriage asset, subject to division between spouses. In other words, most cases will see the RPP being shared 50/50.

The Grip Of Avoidance

Some folks can’t do it. Let’s call them The Avoidant Type. For these people, maybe it’s too disturbing to consider their own mortality, to acknowledge that we’re all passing through, that life is temporary. Maybe they don’t want to upset someone, a family member, a friend, who is under the impression that they will inherit the estate or a certain grab bag of goodies when, in fact, The Avoidant Type has other plans but is reluctant to reveal those plans on paper.

Well, that sort of behavior is irresponsible, cowardly and selfish. Here, The Avoidant Type fails to properly care for loved ones and punts potential controversy down the road for others to manage. The cost of not properly preparing for death may come not only in the form of higher estate taxes or failure to protect assets but, as importantly, there’s the emotional toll. Rightful heirs who feel wronged, family squabbles, expensive self-serving court fights, all of which would not happen if The Avoidant Type had the pluck to express his/her wishes in a Will and to let those wishes be known to heirs before death and while still of sound mind. Belly flopping in the courage department is not a legacy anyone wants to leave behind.

Get It In Writing

A Will could be as simple as taking pen to paper, listing who gets what, then dating and signing the paper. What’s better is if you have an adult witness also sign the Will, a person who could vouch for your authentic signature. Another step even better would be to sign the Will in front of a Notary or a Lawyer, people who are officers of the court and whose word as to authenticity of your signature is unlikely to be successfully challenged. Finally, you could retain an Estates Lawyer and spend a few hundred dollars on preparation of a simple Will. It’s a good idea. Because sometimes we don’t know what we don’t know and, presumably, a lawyer will discuss with you all the issues you would be wise to consider, including those documents that are typically prepared alongside a Will: power of attorney to handle financial matters should you become incapacitated, and a health care proxy allowing someone to make health care decisions on your behalf.

Not only that, but a lawyer will bring you up to speed on what is or isn’t a valid will in your province of residence. For example, holographic wills (i.e., entirely handwritten by you, not witnessed) are recognized in Ontario, Alberta, Quebec, Manitoba, Saskatchewan, New Brunswick and Newfoundland and Labrador. Lawmakers in Prince Edward Island have chosen to blanket the issue in fog, giving the courts discretion as to whether or not to recognize a holographic will. And on the west coast, British Columbia nixed the idea of a holographic will except for those provisions made outside of BC that concern BC real estate. Like I said, it’s a good idea to retain a lawyer to walk you through the maze.

Who is in your life? Who do you want to gift your assets to after your last song is sung? Who do you want managing your finances if you are debilitated by disease or accident? Who should tell doctors to continue or stop treatment when you are unable to advocate for yourself? All weighty issues. All issues that should be well thought out and made known in a written document. For your benefit and for your heirs.


Ken Finkelstein, Financial Blogger