What You Need to Know About Estate Planning

Easy Steps That Make the Difference

Anna Dunaeva DLegal Anna Dunaeva November 11, 2017

Few people in their prime actually like planning for the end – we would rather plan for vacations. However, the press of modern life, changes in personal values, increasing mobility, new technologies and growth of wealth complicate the law and make estate planning a necessity.

While a will is the first thing we may think about, it is not the only one. Sometimes it may be not the best one in terms of timing, expenses or scope of application. Some people may be good with dry and simplified statutory provisions, others prefer more complicated estate planning options such as changing ownership structure of their assets, making gifts during their lifetime or establishing trusts.

Here are a number of general tips one may keep in mind when preparing for the unexpected with estate planning.

estate planning

Estate Planning Tips

Consider who will take care of you and your property in case of a sudden incapacity

In Alberta, the court can grant legal authority to another person to make financial decisions or to take care of an individual who lost capacity. The process is time-consuming and unpredictable. A better option may be to execute an Enduring Power of Attorney and a Personal Directive since you prepare them at a time when you are capable of making your own decisions. You sign these documents in advance, choose people you trust and provide detailed instructions.

You do not need court approval for these documents. However, they become effective only if you lose capacity. The incapacity must be confirmed with an assessment. You can name people in your Enduring Power of Attorney and your Personal Directive, such as, for example, your family member and your family doctor, to undertake the assessment and to determine whether you lost capacity.

Make sure that you know who can manage and inherit your property

Generally, no one can lawfully access your bank accounts, rent out your property or sell your car without your permission, no matter how desperately you or your family needs money. When you travel a lot or have mobility issues, you may be good with a Power of Attorney or similar documents where you appoint people to represent you and set limits for their authority. When you lose capacity, you need an Enduring Power of Attorney or a court-appointed trustee to take care of your property and finances.

In Alberta, if you leave no will, your estate property will be distributed pursuant to the intestacy provisions of the Wills and Succession Act, unless your other specific instructions or other rules of succession apply. The intestacy provisions of the Wills and Succession Act say that, if you are married and all your children are also the children of your spouse, your spouse will receive all your property minus all debts and expenses your estate has to pay.

By specific instructions I mean, for example, insurance and pension plans, bank accounts, RRSPs, RRIFs, TFSAs and other registered investments, as long as you specifically designate a beneficiary for them. If this is the case, these assets will not form part of your estate and will pass directly to the designated beneficiary. It may work well when it saves time and expenses. However, the succession may get complicated when the designated beneficiaries are minors or people with limited capacity.

As for special rules of succession, joint tenancy is an example. We often hold bank accounts or real estate property jointly with another person. The general rule in Alberta is that your share in the jointly owned property will pass directly to the surviving joint owners and will not form part of your estate, to the result that it may go to people you do not want to see among your heirs. Another issue is that the general rule of joint tenancy regime has a number of exclusions. For example, funds held on a joint bank account may ultimately belong only to one account holder if there is evidence to support the entitlement.

Considering all these red flags, I encourage you to check your documents, designations and entitlements to make sure that they comply with your intentions.

Estate Planning for Digital Assets

Monthly withdrawal authorizations, cloud file storage, online access to banking and point reward programs, social media and email accounts, messengers, personal pages and websites are now so ingrained in our lives, that it’s time to include them into our estate planning strategies. This is particularly true considering that there is no unified approach as to what happens to digital information in case of death or incapacity of its owner. For example, Facebook, Google or Twitter allow users to authorize another person to access their accounts under certain circumstances, others let users leave instructions in case if bad things happen, while some services may refuse access to a third party absent a court order.

Keeping these issues in mind, you may want to tell your significant ones about your “digital assets”, appoint a “trustee” or leave instructions to your provider on how to deal with your information after a long period of inactivity or in other specific cases.

Think About Assets You Are Planning To Leave To Minors

In Alberta, anyone under 18 is a minor. People often wish to name minors as beneficiaries under their will, insurance policy, pension plan, or registered investments. Sometimes minors inherit property pursuant to the intestacy provisions of the Wills and Succession Act.

While there can be valid reasons for leaving property to minors, there are some limitations to consider. For example, minors cannot personally receive and manage their money and property – only a trustee can do it in their best interests. A properly drafted will or instructions to insurance policies, pension plans or investments appoint a parent, other individuals or entities as private trustees for the minor’s property and set limits on its management, disposition and release to the child. If there is no private trustee or a minor receives property or money pursuant to the intestacy rules of the Wills and Succession Act, and the value of these assets exceeds $10,000, the Public Trustee receives and manages the assets for the minor’s benefit. To substitute the Public Trustee, a parent or other person can apply to court to be appointed as a private trustee. The process of appointment is time-consuming and not always predictable. Moreover, the court can impose limits on management and disposition of the minor’s assets, require from private trustees to provide some form of security and report regularly about how the assets are being administered.

Where Public Trustee administers the minor’s property, the child generally receives it after he/ she reaches the age of majority. On the one hand, it is a simple and reliable way of managing the child’s property. On the other hand, it limits the child’s benefit from the property and return on investments. Also, the release of assets by Public Trustee right after the child attains the age of majority bears some risks since a young person can lack the know-how to handle significant amounts of capital.

Mitigation of Estate Planning Conflicts

Now we will talk about mitigation of conflicts that may arise when our significant ones manage our affairs and perform our wishes. Here are some basic tips you all know about – just make sure to keep them in mind.

Discuss Your Instructions With People You Want to Appoint as Your Executors, Attorneys or Agents

The more you discuss your estate planning instructions with people you want to rely on, the better they understand your wishes and the easier it is for them to do their best in difficult times. Also, you may want to make sure that your executors, attorneys and agents share your values, and you do not have to add details or change your plan.

By way of example, a conflict of values may arise in respect of funeral/ burial instructions. While executors pay out funeral expenses out of the property left by the deceased (aka the estate), they are not bound by the deceased’s funeral/ burial wishes, whether the wishes are documented or not. Simply put, the body of the deceased is not a piece of “property” in this context, while the deceased’s assets are.

Share Estate Planning Intentions With Your Significant Ones

Let your significant ones know who and to what extent will take care of you and your family, disclose your estate plans and explain the reasons for your decisions. This strategy makes your family members prepared and helps to mitigate conflicts down the road. Here is why.

First, there can be lots of good reasons for your decisions regarding personal care or unequal distribution of property. To name a few, those can be your personal values, beneficiaries’ illness, age or lack of know-how to manage the assets, or significant gifts to some of your family members during your lifetime. While these reasons are obvious for you, you may need to put more efforts into making them valid for others. Also, you may want to reconsider and change your instructions as a result of the discussions with your significant ones.

Leave More Details

Let some of your friends or family members know what estate planning documents you prepared and where you keep them, explain when they may need those documents and what initial steps they should take if anything happens to you. In practice, this knowledge saves lots of time, money and energy.

Where your significant ones are not prepared to dig into details, just make sure that they have contacts of a wills & estate lawyer handy. If you have your will package prepared by a lawyer, let them know the lawyer’s contact details.

Usually, I give my business card and other information together with the will packages I prepare for my clients. If you have it from me – do not be fast to put it into the garbage. While in part this is a marketing tool, there is also a more philanthropic reason for that. First, it is often a lifeline for many people in hardly emotional times, as the lawyer knows the deceased’s situation and the job. More importantly, the estate planning lawyer will usually keep copies of all the documents and details of the discussions with the client. This information will be really valuable if anything happens to the original documents or a dispute arises.

So, do your homework to make it easier for your significant ones to take care of your affairs when things go wrong.

The content of this article is intended to provide a general guide to the subject matter and should not be considered as legal or other professional advice. To get detailed information regarding your specific circumstances, please discuss your situation with a lawyer or other professional. Refer to our Terms of Use for more information.

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