Why have a will when you have beneficiaries?

Q: I am married. I have RRIF and LIRA and my spouse has RRSPs. We have joint cashable accounts too. We have appointed each other as beneficiaries for every account. I am told this arrangement takes longer to settle on death if there is no will. Why do I still need a will?

—Krish

A: Dear Krish, everyone needs wills. When a person dies, their assets are immediately frozen. Who can sign your tax return or deal with your personal effects and creditors? Your will appoints your executor who is recognized as your estate’s legal representative. Even if you are married, you need to designate someone to do this. Wills appoint legal representatives for your estate.

If you die, your spouse cannot take legal steps on your estate’s behalf. This is only the job of an executor/estate trustee. Everyone will ask your spouse if you had a will and designated executor. Without wills, additional costly steps may be required to handle your assets.

I also must caution you about financial institutions holding your investments. They are not always perfect record keepers.  Forms get misplaced and records are lost. Who guarantees your designated beneficiaries are properly recorded and current?

READ: Is a will without witnesses valid?

Don’t think your attorney under any power of attorney can fix any problems. Once you die, attorneys lose all their authority. You need someone to take over that job when you die. That person is your executor or estate trustee. Having executors is important regardless of how you hold or designate your assets.

Everyone needs wills

Yes, even if all your assets have designated beneficiaries, you need wills.

What if there is a mistake naming your designated beneficiary of your RRIF? What if your estate becomes the beneficiary by default? Your spouse may have challenges collecting funds without your will.

MORE: Why adding your kids to the house title will cost you

Life doesn’t always go as we plan. That is another reason to make wills. You need to deal with contingencies and prepare for possible catastrophes. Isn’t that why you are insured for accidents, fire and even hurricanes?  Wills give you that extra insurance.

What happens if both you and your spouse pass away? This could be in a common accident or within days of each other.  You cannot deal with these possibilities only by designating your spouse as your beneficiary.  With wills, you can name backup beneficiaries. Your executor can collect such assets, pay your bills and disburse benefits.

Who is your backup beneficiary in case your spouse dies before you? If you wait until that happens, you could be out of luck. You could, at that moment, be too ill or incapable of making your will. Why take that chance?

You are never too young to make your will. Make your will now.

Ed Olkovich is a Toronto lawyer and certified specialist in Estate and Trusts Law

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