Estate Planning is about ensuring that your assets are distributed in the way you wish and minimizing the burden on your loved ones after you pass away.
As you go through the planning process, there are many questions to consider in order to create an estate plan that best meets your needs.
1. Do I need a Will?
Having a Will is arguably one of the most important things you can do for yourself and your family. Not only can a Will legally protect your loved ones and assets, but it can also specify exactly how you would like your affairs handled after you have passed away. Furthermore, if you have minor children, your Will can dictate how they will be cared for upon your passing.
There are many reasons people fail to prepare a Will. These include thinking they don’t have enough assets, having joint assets that automatically go to their spouse, or thinking they are too young to worry about it. If you pass away without a Will (intestate), it can lead to further complications and delays for your loved ones during an already challenging period. Taking the time to prepare a Will ensures your loved ones are looked after by allowing you to tailor the distribution of your assets to their specific needs instead of leaving your affairs in the hands of the provincial government.
2. How often should I update my Will?
It’s good practice to review your Will at least every three years or whenever a significant change occurs in your life, such as getting married or divorced, having your first child or grandchild, retiring, or experiencing a significant health event.
3. What type of Power of Attorney do I need?
A Power of Attorney (POA) is a legal document that gives someone of your choosing, your “Attorney” (not to be confused with a lawyer), the right to act for you when you cannot do so yourself. There are two types of Powers of Attorney – one for property and one for personal care. To ensure your affairs are properly taken care of, you should have both agreements in place.
Your Attorney for Property has the power to make financial decisions on your behalf, such as dealing with banking, investments, or selling a property. Should you lose mental capacity and failed to appoint an Attorney for Property, a family member or friend must apply to the court to be named your “guardian” before they can act for you. This can result in significant delays.
A POA for Personal Care, sometimes known as a Living Will, gives the designated Attorney the power to make decisions regarding your medical treatment when you are unable to. The issues that the Attorney can address include hospice care, change of physicians, use of experimental therapies, nutrition, and the use of ‘heroic measures’ to prolong life. In the absence of this arrangement, the concept of patient/doctor confidentiality may mean your loved ones can’t make fully informed decisions regarding your health. Ideally, your appointed Attorney(s) for Property and Personal Care should act in tandem to ensure your affairs are managed properly.
4. Who should I name as Executor?
Although being named an Executor on a Will is often considered an honour, it can actually be a burden. If there is any complexity to your financial affairs, or if there is a complicated or sensitive family situation to deal with, the role of Executor can be both time-consuming and demanding. Most people pick a family member or friend without giving much thought to what the role entails. Given the complexities and fiduciary responsibilities associated with the role, ensure that your chosen Executor is willing and able to take on this role upon your passing. An option is to name a Trust Company, such as Scotiatrust®, as Executor of your estate.
5. Does it matter if my assets are jointly owned?
Holding assets jointly with rights of survivorship can be convenient and practical. Since joint assets pass outside of your estate and go to the surviving owner, this can save time and money in the administration of your estate. However, before taking this step, you should consider factors such as loss of control, exposure to creditors, and unintended tax consequences.
Summary
While answering the questions above is a great starting point for creating an estate plan, the conversation shouldn’t end here. To create a comprehensive plan customized to your specific situation, you should engage a professional with expertise in Will and estate planning.
Contact us to find out how we work together with an Estate and Trust Consultant at Scotiatrust to help you with your Will and estate planning needs.
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We offer you a range of services from creating bespoke financial plans and providing investment advice to helping you take advantage of our investment models. If you would like more information on the Wealth Navigator Process or our team, call me any time at 416.355.6370 or email me at richard.dri@scotiawealth.com.
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