So you’ve just gone through a major life change. Maybe it’s a happy occasion - you’ve moved to a new city, gotten married, had a baby, or bought a home. Or maybe it’s a challenging time because you’re going through a separation or divorce, you’ve recently lost a loved one, or you’ve been diagnosed with an illness.
In this article, we’ll provide a practical checklist of decisions to revisit after common life changes, and give you the confidence to make the updates required to reflect your new normal. Updating your estate plan may not be your top priority as you navigate change, but with very little time you can ensure your legacy is protected.
What counts as a major life change for estate planning?
Most people who create or update a will on Willful are motivated by life changes, but which ones should cause you to create or update your estate plans? While these can include legal events like marriage, divorce, or separation, they should also include life milestones and realities.
Important
The key rule of thumb: if you’ve moved provinces, gone through a life change that affects the decisions in your will or power of attorney documents, changed your mind about who you’ve appointed in key roles, or someone named in your documents is unable to act in that role, it’s time to make a change.
And, if you’re approaching retirement or you’ve been diagnosed with an illness, it’s important to ensure you’ve appointed people to make medical and financial decisions on your behalf if you’re not able to.
Common life events that trigger a review
These events may require you to update your estate plans:
A change in marital status
- Getting married (common law or legal): While marriage no longer revokes a will in Canada, it’s important to ensure your spouse is appointed in key roles, for example executor or beneficiary of your assets, especially because in most provinces you have a legal obligation to provide for a legal spouse when you die.
It’s even more important to create or update your will if you’re in a common law relationship, since if you die without a will, many provinces don’t include common law spouses in the list of people who receive assets - for example in Quebec, if you die without a will, your common law spouse is entitled to nothing. - Divorce, separation, or death of a spouse/partner: If you’re no longer in a relationship, you’ll likely want to update your will and power of attorney documents to remove that person from key roles like your medical/financial decision-maker, beneficiary, or executor.
Moving provinces or countries
While you typically don’t need to update your will or power of attorney documents when you move cities, it’s best practice to update if you move provinces, since every province has different estate planning legislation.
Since Willful is available across Canada, it’s as simple as changing your province in your account - your estate planning documents immediately update to reflect local legislation, and you just have to re-execute them to reflect those changes. Likewise, if you’re a newcomer to Canada it’s important that you update your will according to your province of residence.
Birth of a child or additional children
The most common reason to create a will on Willful is the birth of a child. Parents want to ensure their children are reflected as beneficiaries and decide what age or ages they should receive their inheritance; and appoint guardians in the event that they and the other parent pass away.
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Loss of a loved one
If you’ve named a loved one in a key role in your will, for example if the person you named as your executor passes away, it’s important to remove them from that role in your estate plans, and replace them with someone who will be able to act in that role.
Key changes in net worth and/or assets
If you buy a home, start a business, receive an inheritance, or your financial situation otherwise changes drastically, this may warrant a will update - for example, you may want to leave specific gifts of cash, items, or business shares to a loved one, change how your assets will be distributed, or assess the need for additional planning, for example a secondary will to separate business assets as part of a probate strategy.
Review and update your will
Wills are the foundation of legacy planning, but they’re only the tip of the iceberg for a comprehensive estate plan. Small changes, like changing your executor choice, can have outsized consequences, so it’s important to review those decisions regularly, and update them as needed.
In the previous section, we outlined some of the life changes you may experience that may require you to change the decisions in your will. Now, let’s look at how changes in your loved ones’ lives could cause you to change key roles.
Executors and guardians
Your executor has a big job; same with the guardians for any minor children or pets who have to take on their care in future. You’ve likely appointed people you trust in those roles, but over time, you should ask yourself the following questions:
- Do they still have the willingness and availability to act in this role? For example, if you appointed your sister as guardian, and she now has a busy job and three children of her own, is it feasible that she could take on another child if something happened to you and your co-parent?
- Are they located close enough to me to reasonably handle on-the-ground logistics when I pass away? For example, if your sister moved to Australia, it would be difficult for her to manage your estate in Canada, and it may also have unintended tax consequences.
- Is their age a limitation? Will they be likely to be alive and healthy when I die? For example, if you’ve appointed your mother as your executor, and she’s now in ill health, it may not be realistic for her to take on that role.
It’s important to add backup guardians and executors in case your primary choice can’t take on the role - it’s easy to appoint both primary and backup choices on Willful.
Distribution of assets
We outlined how entering or ending a relationship can be a major trigger to update your estate plans, and this isn’t just because you want to ensure your documents include or exclude a partner. It’s also because blended families can add complexity, and may require you to seek out legal advice.
If you’re in a second marriage, and you have children of your own, you may want to use a spousal trust to protect their future inheritance; or you may want to use a life interest trust to give your spouse the right to live in your home until they also pass away, and then revert it to your children. While these aren’t complexities available on Willful, they’re important to consider, and can be discussed with a legal professional.
You don’t need to update your will every time you get a new car, buy a new home, or otherwise change your asset mix, since your will covers everything you own at the time you pass away, minus any jointly-owned assets, or registered retirement accounts or life insurance policies with beneficiaries named directly.
However, you may want to add an item as a specific gift in your will, for example leaving your car to your brother. It’s not necessary to list all personal effects in your will, though if you want your executor to be legally obligated to distribute a gift, make sure you list it in your will. Otherwise, you can create a separate letter to the executor outlining your wishes for those, though it’s not legally binding (for example “donate my clothes to Goodwill” or “make sure my friend Suzy gets any of my jewelry that she wants”).
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Revisit beneficiaries on all accounts
Your will covers everything you own at the time you pass away, except for any jointly-owned assets, for example a home you own with your spouse; and any life insurance policies or registered accounts that name a beneficiary directly - for example, a term life insurance policy that names your spouse as the beneficiary
Important
It’s extremely important to review and update any of these accounts when you’re updating your will, or when you’ve gone through a life change. There are too many examples of life insurance policies naming a sibling or ex-spouse as beneficiary, instead of a spouse or children, simply because someone forgot to change a name.
Registered accounts and insurance policies
When reviewing your estate plans, ensure you review the following to make sure beneficiaries are up to date, and contact financial institutions or insurance companies to make any beneficiary changes:
- Life insurance policies (either held personally or through workplace benefits)
- Registered accounts (RRSPs, TFSAs, etc.)
- Pensions
While you can name your estate as a beneficiary of a life insurance policy, most people appoint an individual for two reasons: first, life insurance proceeds typically take weeks to pay out, vs. estate proceeds, which can take 12-18 months. Second, life insurance proceeds bypass probate, which means they avoid probate fees.
Coordinating beneficiaries with your will
Does your will work with your life insurance policies and registered accounts, or against it? For example if you have a life insurance policy that names your brother as the beneficiary, but then a clause in your will states that your life insurance proceeds should go to your sister, this can cause confusion and delays.
By reviewing your will and any beneficiaries named directly on accounts or policies, you can ensure that your assets will flow the way you intended.
Update powers of attorney and health directives
Power of attorney documents are like car insurance: you don’t buy car insurance intending to get into an accident, but it’s there just in case you do. While you hope you’re never incapacitated and need someone to make medical and financial decisions on your behalf, these documents give clear authority to the person or people you would want to be your voice, and it’s important to review and update them alongside your will.
Financial power of attorney
Just like revisiting an executor’s age, proximity to you, and capacity to take on the role is prudent, the same is true for your financial decision-maker. If you couldn’t manage your finances, would this person still have the capacity, ability, and willingness to act in this role?
For example if you appoint your sister in Australia to manage your finances if you’re incapacitated, it would be difficult for her to handle any in-person obligations for your financial accounts without major expense and disruption.
Health and personal care directives
If you’ve been diagnosed with an illness or you’re approaching retirement, you may have different preferences around your future healthcare than when you first created this document. It’s important to revisit not only who you’ve named to make medical decisions on your behalf, but also to revisit your decisions around pain management and life-extending measures. With Willful, it’s easy to update these roles and preferences.
Consider how family dynamics have changed
Modern families are rarely simple, so as your family dynamics change, so should your estate plans. If you die without a will, the default rules in your province may not distribute your assets the way you would want, and it means that the courts have to appoint your executor and/or a guardian for your minor children, if required.
Supporting minor children or dependents
If you have minor children, you’ll make two important decisions in your will: who will take on guardianship in case you and your co-parent pass away before they’re adults; and an inheritance plan for when they should receive any assets.
If you die without a will, your children’s inheritance will be tied up by the courts for years, and they’ll receive the full inheritance as soon as they become an adult. By having a will, it gives you control over when they receive their inheritance. With Willful you can even phase it over several years - for example half of their inheritance at 21, half at 25.
If a guardian does care for your minor children, they can access the funds held for your children to cover costs like food, tuition, housing, and ongoing care.
If you have children with a disability, you will need to work with a professional to include special considerations that protect their disability benefits.
If you created your will when your children were minors, and they’re now adults, you may want to update decisions in your will - for example removing guardians as they’re unnecessary now; or appointing your children as your executor.
Review digital assets and online accounts
Our digital footprints span dozens of accounts, including social media profiles, email accounts, streaming services, and digital banking. As your life changes, you may want to revisit any legacy contacts you’ve appointed on accounts (Facebook, Apple, and Google all have this feature), and either share or restrict access to passwords or account credentials you’ve shared with loved ones.
What to include in a digital inventory
Willful helps you create an estate inventory, which lists out your assets and liabilities - for example bank accounts, properties, or valuables, alongside credit cards, loans, or debts - to make it easier for your executor to close things up when you pass away. Typically this doesn’t include login details or passwords, though you may choose to share those with loved ones.
This inventory should also include digital assets like cryptocurrency, and can also include details about any password managers you use, or digital instructions. Having a clear list of your accounts will ensure your executor doesn’t have to go on a wild goose chase to close up your digital life.
Learn more about estate planning for digital assets→
When to seek professional guidance
There may be life changes that require additional legal considerations. For example, if you’re going through a separation or divorce, you will likely work with a family lawyer and ensure any legal agreements work in tandem with your will. Or, if you have complexity to your situation - for example you’re now part of a blended family, or you have a child with a disability - a lawyer can provide customized advice and planning. They can also create trusts behind a simple trust for minors, and handle any trust revisions.
You may also want to consider additional tax planning as your life changes, for example if you start a business, or are passing on secondary properties like a cottage. If you’re not sure if you need professional help, the Willful team can point you in the right direction.
How updating your estate plan creates peace of mind
Estate plans tend to be set them and forget them - we create wills and powers of attorney documents and file them away somewhere to gather dust. But your estate plans should reflect your life and the people in it, so it’s important to revisit and update plans after key moments to ensure your wishes are clear, and the people you love are included.
Creating an up-to-date, comprehensive estate plan is not something that ever benefits you - it’s for the people you leave behind. Keeping your plan current means your loved ones will have a current snapshot of your wishes, and it will save time, burden, and court involvement.
Conclusion
If you create your will and don’t update it over time, it will lock in outdated decisions, and could mean your assets don’t go to the people you love, and the people you trust aren’t empowered to act in key roles like executor or guardian for children. Small changes now can avoid big headaches later.
Updating your legal documents regularly, which you can do for free anytime on Willful, leads to clarity, reduced conflict, and confidence. So set a reminder to review your plan every year, and use Willful to empower you to create and update your will without breaking the bank.
Download your free estate planning checklist to keep you on track this year.
