Buying a house is probably the largest investment you will ever make and it is a huge milestone in your life; something to be very proud of.
Everything that you have to consider and keep in mind, for example closing costs, property taxes, maintenance fees (if you bought a condo or condo townhome), budgeting for furniture and the cost of moving and setting up will most likely overwhelm and stress you out. One thing that should be at the top of your mind, however is making or updating your Will.
Having a legal, up-to-date Will is the only way to bequeath your property to your loved ones. If you are the sole owner of your home, a Will is absolutely necessary. It’s the only way to legally determine how your home and possessions will be divided after you are gone.
If you are the joint or co-owner of the property, everything will be distributed depending on the nature of ownership. In the case of:
- Joint-ownership: Full ownership of the home will automatically pass to the other owner(s). Therefore in this scenario a Will is not necessary but you would ultimately need it to decide how your possessions should be distributed.
- Tenants in common: In this case a Will is important so that you can decide who will inherit your interest in the home after you die.
It is very important to understand that if you die without a Will (intestate), you will lose control of what happens to your property and possessions, and provincial law will dictate what will happen from then on. It will depend from Province to Province but in general if you have:
- A spouse but no children: Your spouse will inherit everything
- No spouse and no children: Your parents will inherit everything
- A spouse and children: Your spouse and children will inherit specific portions. The rules on proportions vary by province and size of the estate.
- No spouse but some children: Your children will share your estate equally.
- No spouse, children, nor parents: Your siblings will share your estate equally. If you have no siblings, your nieces and nephews will inherit it equally.
Additionally, if there is no Will, your estate will have to go through the probate court process which is a time-consuming and expensive process, causing a delay in the ability of your family members to access your bank accounts and be able to administer your estate. This will in turn cause many other issues like the inability to make mortgage payments on the property.
Also, your home will not transfer to anyone until they are named as an estate trustee (executor). When you make a Will you can name an executor who can handle the distribution of your assets. It will also be the trustee’s job to pay off your debts. It may be worthwhile to start having conversations about your financials with your appointed trustee so that they are prepared.
Under the intestacy rules of Ontario, if you have a spouse and kids, your spouse will receive the first $200,000 of value and the remainder of the estate will be divided as such: 1/3 to spouse and 2/3 split between the kids. In this example, if the house is the only (or largest) asset of the estate, the executor may need to force a sale of the home in order to give each person their share, regardless of whether the spouse or kids want to sell or not. A Will will enable you to name a beneficiary(ies) who can inherit your home and will help your family avoid this unnecessary stress at an already difficult time.
Additionally, in some provinces, like Ontario, common-law partners are not entitled to anything therefore, if you die intestate, and have kids, your property could go directly to the children, bypassing your common law partner entirely. Therefore, it’s important to have a Will in place so that you can make sure your common law partner will inherit what you want to have.
Lastly, having a Will will give you the option of leaving the home in a trust, in case you have minor children. This way, they can inherit the property when they reach the age specified in your Will. Without a Will you wouldn’t be able to do any of the above.
Making a Will may seem like a grim and daunting thing to do. It is probably something you don’t want to think about or consider but it is absolutely essential to securing your loved ones’ future when you are not there anymore.