There’s a lot of paperwork to put together when you’re purchasing a home, the last thing that anyone wants is to add more administration to an already pen to paper intense time period, but what about a living will?  Creating a will when you purchase a home may not be on the top of your to-do list, but it’s a good idea to think about what’s going to happen to your assets (and liabilities) should you die before you pay off your home.  More and more people are retiring with a mortgage.  American data reveals that 30 percent of people aged 65-74 still have a mortgage, and 14 percent older than 75 years old carry some household debt.  Here’s the unfortunate thing, whether you’re 32 or 62 it’s a good idea to ensure that your assets and debts go where you want them.  Many people assume that their property will go directly to their partner should they pass away; this isn’t always the case.

Canadians who die without having completed a valid will are considered something called “intestate” – this means that the government decides how everything gets divided up, not you, and not your family.  Each province has different rules, and usually assets end up going to your spouse or kin, but they may end up incurring additional legal costs as a result of your “intestacy” and these rules don’t take into account your wishes for your estate (it’s nothing personal, it’s just how the rules work).

Another thing to consider that although most provinces give a person’s spouse a preferential portion of your assets, the definition of spouse is different in each province.  On top of that, most provinces rules surrounding such situations will not recognize a common law spouses.

That doesn’t answer what happens to your mortgage though.  This is a very important question for Canadians, Torontonians specifically, where real estate is more than just a pretty penny.  Today Canadians hold a combined debt load of 1.6 trillion dollars to consider for their estates.  Your mortgage debt is attached to your house, not you or your partner.  Bankruptcy trustee Andy Fisher of Farber Financial Group recently told The Globe and Mail, “If somebody passes away and there are no funds to make payments on the mortgage, then the mortgage stays with the house,” he said. “Somehow, through selling the house or refinancing, the mortgage has to be paid.”

A little extra work now could mean a lot to your family and free up some funds so they’re able to refinance your mortgage if they need to. This isn’t something we want to think about, but is definitely something we should think about!

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