Moving to a new country like Canada is an exciting prospect. And there are many important areas you’ll focus on when settling into a new country. Finding employment, housing, health coverage and building your finances can take precedence. But once you’re settled in Canada, it’s also important to protect yourself and your family by making a will.
In this article, we’ll cover what you need to know about making a will as a newcomer to Canada and the process of getting a will made.
- What is the difference between a will and a power of attorney?
- Why do you need a will?
- Do you need a separate will in Canada?
- Making a will in Canada
- Making a will with a non-resident executor
- Protect your assets and your family
|Want to know more about managing your assets?
See Canadian Finances 101: What You Should Know as a Newcomer to learn more about banking, investments, and financial institutions in Canada.
What is the difference between a will and a power of attorney?
Some people think that a will and a Power of Attorney are the same things. While both are legal documents, they have very different purposes.
A Power of Attorney for property gives one person or persons the authority to manage your finances and property if your health or mental capacity declines and you’re no longer able to manage your assets. The person you appoint is called an “attorney,” however that person doesn’t need to be a lawyer. It could be a spouse, an adult child, a trusted family member or a friend who you appoint. They then have the power to make decisions on your behalf.
The major difference is that a will only comes into effect once you pass away, while a Power of Attorney is valid while you are alive, and ceases to be effective upon your death.
Why do you need a will?
A will is a legal document that explains how you want your estate to be distributed once you die. An estate includes any money, bank accounts, property, valuable possessions or other assets, as well as your liabilities, such as any mortgages or loans. Each province and territory in Canada has its own set of laws for estates.
You don’t have to be wealthy to make a will. If you own assets or if you have a family, it’s important to make a will. Here are some reasons why:
- Estate planning—it allows you to specify how your assets will be divided and who gets what.
- You can appoint the executor of your choice to administer your estate.
- If you have minor children you can nominate a guardian who will care for them in the event of your death.
- A will lets you plan for how you will pay for income taxes and probate fees which may be payable at your death.
- You can establish a trust for minor or special needs beneficiaries, so they are provided for.
- Without a will, your estate will be divided according to the governing laws of the province or territory where you lived and may not reflect your wishes with respect to the distribution of your estate.
Do you need a separate will in Canada?
Perhaps you already have made a will in your home country and assume that will protect you and your family if the worst happens. Although foreign wills are generally recognized in other countries, it’s advisable to make a separate will in Canada. Here are some reasons why:
Greater peace of mind
Different countries may have different laws about how your assets would be divided. Even if you have made a will in your home country, Canadian laws could mean your wishes aren’t fulfilled. For greater peace of mind, it’s best to make a will in the province or territory where you now live.
Additional costs and delays
If you have a non-Canadian will, it may need to be submitted to court to be “resealed” in Canada or an ancillary grant of probate obtained. Probate is a legal process where the courts appoint an executor to determine if the will is valid and ensure that the assets are distributed appropriately. This process will not only cost additional money, which will be deducted from your estate, but will also delay the process of dividing your estate among your loved ones.
Name a guardian for your minor children
If you have minor children it’s important to have a will. In your will you can nominate a guardian for your minor children. In Ontario, the appointment of a guardian in a will is only effective for 90 days. In that time, your nominated guardian must apply to the courts for permanent guardianship of your children. Making a will in Canada helps simplify the process of executing guardianship.
Making a will in Canada
If you’re ready to make a will in Canada, here are some steps you should consider:
Find a lawyer in your province
It’s a good idea to get professional help in making your will. A lawyer will understand provincial laws and can provide advice when it comes to estate planning. They’ll also make sure your will is prepared and witnessed properly. If you don’t have a lawyer who can help, visit the Federation of Law Societies of Canada to search for a lawyer from your province. In British Columbia and Quebec, you can also hire a notary public.
Name an executor
An executor is a person or persons you nominate to manage your estate after you pass away—an executor is also called an “estate trustee” with a will in Ontario, and a “liquidator” in Quebec. Your executor will carry out the instructions you left in your will. You can nominate an individual or individuals to be an executor, or you can appoint a trust company. Often people choose a trusted family member or friend. It’s a good idea to talk to whoever you nominate beforehand to make sure they are comfortable with taking on this role.
In Canada, if you don’t nominate an executor, the local courts will name someone to manage your estate instead.
Keep your will updated
Once you have made a will, you may think you don’t have to update it. But if your life circumstances change, you want to make sure your will accounts for this. For instance, if you buy a home, get married, divorced, or have children, you will want to review your will. It’s important to note that in some parts of Canada, getting married, being in a common-law relationship, or being separated may revoke your will or can cancel out certain provisions.
To learn more about the laws that relate to wills, visit the provincial and territorial resources on estate law.
Making a will with a non-resident executor
Naming an executor for your will can feel like a big decision. If you’ve recently moved to Canada, you may decide to nominate a family member or friend who lives in another country as your executor. However, it’s important to understand the implications if you choose to do this.
When your estate goes through the courts and your executor doesn’t live in Canada, this person may be required to post an administration or probate bond. The bond is essentially an insurance policy that the executor is required to take out. The amount they will need to provide is usually at least equal to your estate’s value—which could be a lot of money. The reason for the bond is to ensure your executor carries out their financial responsibilities and to ensure the provincial government ensures any taxes or other liabilities are paid.
There may also be practical challenges if your executor is a non-resident of Canada. Tasks such as signing documents, selling any real estate, dealing with financial institutions and government officials are more challenging when the person doesn’t live in the same country or is in a different time zone. Appointing a non-resident executor may also have additional income tax implications on your estate.
Protect your assets and your family
If you live in Canada and have assets such as bank accounts, real estate, investments or other valuable property, it is important to have a will. A will allows you to state how your assets will be distributed after you pass away and who will assume the important role of administering your estate.