ESTATE PLANNING
There is a certain reluctance in all of us to address the subject of estate planning as it requires us to consider our death and what is going to happen after our death. Estate planning is more than just what happens upon death and it ought to be considered in the broader context of the accumulation and usage of ones property during their lifetime as well as the distribution upon death.
- What is a will?
- Why do you need a will?
- When do you need to revise your will?
- What happens if you die without a will?
- Power of Attorney
- Representation Agreement
Too often difficult family or financial situations arise which could have been prevented by spending a few moments of estate planning. The planning may result in a simple will, a guardian appointment, transfer of property to joint ownership or the designation of a beneficiary in a RRSP or insurance policy.
A will is a legal document made by you to take effect upon your death. It gives instructions on how your assets are to be divided and how your affairs are to be handled.
A will serves a variety of functions:
1. Appointing a personal representative to handle affairs after your death;
2. Appointing a guardian for children under the age of 19;
3. Selecting family/friends/ charities/or other organizations to inherit you assets;
4. Ensuring that your beneficiaries receive inheritance in a manner and age that you feel is suitable;
5. Potential tax planning;
6. Reducing the cost of administering your estate.
When do you need to revise your will?
When there is a material change in your circumstances which may include, birth, death, marriage, marriage breakdown or divorce, change in circumstances of guardian or executor-trustee named in your will, or a substantial change in assets or liabilities or tax laws.
What happens if you die without a Will?
Where a person dies in British Columbia without a will, a person is said to have died intestate. The administration of your estate will be distributed in accordance with the laws of British Columbia.
The Estate Administration Act sets out the scheme for distribution of the estate of a deceased person. Dying without a will can cause a great deal of stress and expense to the surviving family members. Some of the problems include the following:
(1) There is no executor appointed and the estate cannot be dealt with until the court appoints someone to administer the estate;
(2) Disputes are far more likely to arise amongst family members as the person applying to be the administrator needs to get the consent of all persons with an equal or greater right to apply;
(3) Where children are involved a guardian is court appointed;
(4) Lack of estate planning can lead to increased taxes.
(5) Some beneficiaries will not be adequately provided for. Where there is a spouse and two or more children the spouse is entitled to the first $65,000 and a life interest in the family home and one third of the balance of the estate. This may simply not be sufficient for the spouse;
(6) Children receive the inheritance at the age of 19. Many people use trusts to defer the distribution until an older age when they feel a child is better able to handle the money;
(7) If a beneficiary is receiving disability assistance the distribution of assets may render them ineligible for disability assistance; and
(8)There will be no gifts to friends or charities
The above is by no means an exhaustive list of the problems from dying without a will. Ultimately, the delay and expense of administering an estate can be avoided by planning your estate during your lifetime. It is highly recommended that you consult a lawyer to avoid some of the problems listed above.
A Power of Attorney is a method of giving someone the power to conduct your financial affairs. This document is often granted when a person’s mental
capacity is weakening because of age or illness or other factors and a person no longer feels capable to adequately manage their affairs. By having a Power of
Attorney it allows you to appoint s omeone you trust to make financial decisions on your behalf. In order to grant someone a Power of Attorney you must be mentally
competent. Unless your Power of Attorney specifically provides to it is to continue to be effective notwithstanding your mental incapacity the document will cease to be effective. Therefore if planning for incapacity an “enduring” clause is highly recommended.
The Power of Attorney can be cancelled at any time by the person who granted it assuming that he or she is still mentally sound. Like a Will, a Power of Attorney is an essential part of an estate plan.
A Representation Agreement is a method of giving someone else the power to make health care and personal care decisions. The Representation Agreement can either take effect immediately or in the happening of an event such as incapacity.
The law also allows you to appoint a monitor to make sure that the
representative complies with his or her duties.
