11 Steps To Financial Freedom – Step 10: Create Or Update Your Will
After reading an article in a recent MoneySense magazine called 11 Steps To Financial Freedom, I thought it would be interesting to go through each of these steps one-by-one and share my results on this blog. Each week I’ll go through one of the 11 steps to financial freedom, with the intention of creating a complete financial plan by the end of the series.
Over the past several weeks I have prioritized my goals, determined my net worth, recorded my cash flow, compared my spending to my goals, set my top three goals, developed a strategy to reach our goals, reviewed my insurance coverage, attempted to slash my taxes, and created an investing policy.
This week we take a look at step 10: create or update your will.
Write Up Your Will
Creating a will has been on my financial to-do list for quite some time. Back when we started this blog I confessed that one of my financial sins was not having a will in place. Not that I’ve been looking forward to setting up a will or anything, but it was this step that gave me the idea to write and complete the series.
According to the MoneySense article, every adult who owns assets and has a spouse or children should have a will. An accurate and up-to-date will is the only way to ensure your assets will be distributed the way you want them to be.
Action Step #10: Creating or Update Your Will
Your will should be updated and filed with your financial plan, but if you don’t have one in place you should hire a lawyer to draw one up for you.
I’m meeting with a lawyer tomorrow who specializes in wills and estates. I was sent a 19-page document to fill out prior to our meeting, which asks for all kinds of information about you, your spouse, your children, and your finances (assets and liabilities).
Next you need to list your instructions for your will, including naming an executor, declaring a guardian for minor children, naming beneficiaries, and choosing a power of attorney.
Why do I need a Will?
Without a will, your estate will be divided according to the laws of your province. For example, if you are married with several children, the Intestate Succession Act of Alberta states that your spouse receives the first $40,000.00 and one-third of your estate. The remainder of your estate will be given to your children. If you have minor children, the Public Trustee of Alberta will look after the children’s interest.
How Much Does a Will Cost To Prepare?
The cost of a will is quite reasonable, considering its importance. A few hours of a lawyer’s time could mean substantial savings in taxes and probate fees. In our case, we were quoted based on a flat rate of $250 for a single person, and $400 for a couple.
How Do I Pick An Executor?
The purpose of the executor is to carry out the wishes of the person who made the will. The executor is responsible for paying all the debts of the estate (including taxes) and to distribute the estate to the beneficiaries according to the terms of the will.
How Do I Appoint Guardians?
One of the main reasons for young couples to have a will in place is to appoint guardians for their children who are under 18 years of age. The guardian will be the person legally responsible for raising the children.
Final Thoughts
Creating a will has been a priority of mine for the past three years, but it’s just one of those things that gets easily pushed aside to deal with “some other time”.
Even though we don’t like to think about our own mortality, it’s important to have a proper plan just in case something does happen. I’m glad that we finally took the initiative to create our will, and I look forward to finishing up the process this week.
This series will wrap up next week when we reach step 11: create your final plan.
Better have a ‘living will’ as well. If you’re still alive but can’t make decisions I believe that can lead to all sorts of financial problems. How can your spouse sell your house if it requires your signature, but you can’t sign?
We got both a will and a living will done at the same time, not much additional cost or effort. So now no matter what, my spouse can take control of the finances without issue.
@InsureCan – Yes, I will be giving instructions for personal directives (living will) as well. Thanks for mentioning it!
Love your 11 steps to financial freedom but I think you are missing an essential element in the wills module. Power of attorneys (PoA)are just as if not more important than a will. They generally are completed at the same time. Will speak for the person after they die, PoA speak for the person while alive but unable to speak for themselves. People live longer lives today and are more susceptible to be incapacitated or require some assistance during their life. Although many put off making a will until they are “older”, in fact they should have POA as soon as they embark on their life’s journey. I would be pleased to contribute something for our segment, if interested.
Everyone talks about getting a lawyer, but I don’t know how. How do you choose a lawyer? Do you really need one? What about notaries and will kits? Do you really need a lawyer if you don’t have assets? (I only have student loan debt, but want to name a legal guardian for my child)
I am a 76 year old woman living in Quebec and without much assets except for a RIFF and CREIT shares as well as a bank account…with very little money. Do I really need a will or a PoA…and how much will that cost.
Thanks.