Estate Planning
Please read and fill out the Estate Planning Questionnaire
Reasons To Update Your Will
We recommend that you review your will at least every five years or whenever there is a major change in your life. Mark your calendar as a reminder to read your will once each year, perhaps on the anniversary of its signing.
The following is a list of is- sues which may affect your decision. This is a general guide only and if you have questions, please contact us.
Executors
Have your executors moved out of Alberta? If so, they may have to post a bond in order to probate your will. You can save your estate cost by appointing at least one Alberta executor. Are any of your children now over the age of 18 years. If so, are any of them mature or experienced enough to act as your executor should both of you die?
Guardians
Natural parents are automatically the guardians of their children. You should appoint a guardian in your will to care for your children in the event both natural parents die before all of the children reach the age of 18 years. Do your guardians have sufficient space in their home and sufficient resources to care for your children? Are those named guardians still appropriate. considering their age and where they live?
Marriage / Divorce
If you marry after you sign your will, then your will is revoked unless it specifically states that it is made in contemplation of marriage to that spouse. Your estate would then be divided in accordance with the Intestate Succession Act of Alberta. On the other hand, if you divorce after your will is signed and leaves property to your former spouse, then that spouse
will inherit in accordance with that will, unless you change it.
Adult Interdependent Partners (Common-Law Relationships)
The law is evolving in this area. The Adult Interdependent Relation-ships Act of Alberta ensures that adult couples, whether op- posite sex or same sex, who live together in a Relation- ship of interdependence for
3 years or have a child of the relationship will have many of the same legal rights as legally married spouses. If you have not adequately provided for your partner in your will, they can apply to the court under the Dependants Re- lief Act for a greater share of your estate and the court has the power to change your will.
Second Marriage
If you have children under the age of 18 years from a prior marriage and if you leave all of your estate to
your current spouse, then your minor children, through the Public Trustee, have the right to make an application to the court for a share of your estate. Proper planning today can save your spouse and your children the cost and emotional upheaval of such a dispute.
Handicapped Beneficiaries I any of your children are physically or mentally disabled and therefore unable to earn a livelihood, then they can apply to the court for a greater share of your estate. You should ensure that you have made adequate provision for the maintenance of those dependants, so as to avoid any disputes and resulting expenses. If your beneficiaries are receiving government assistance, consider a discretionary trust to keep such assistance in place.
Insurance / Pensions
You can designate a beneficiary of life insurance in your will. It is often advisable to include a separate life insurance trust to hold insurance proceeds for children under the age of
18 years. Similar designations and trusts can also be established for pensions. However, if you acquire a new insurance policy or pension plan after the date of your will, the designation in the will does not cover that new policy.
Registered Retirement Savings Plans
You can designate a beneficiary of your Registered Retirement Savings Plans and Registered Retirement In- come Funds with the financial institution or in your will. The funds can be rolled over on a tax deferred basis to your spouse’s or adult interdependent partner’s (common law’s partner’s) RRSP or RRIF, but the funds may be fully taxed if designated to another person. Seek ad- vise if you intend to designate anyone else as a beneficiary.
Property Outside Alberta Wills are governed by provincial legislation. If you own real estate outside Alberta, then the law of that jurisdiction will apply. You should ensure that your Alberta will is sufficient to deal with your foreign property. Consider having a lawyer in that other jurisdiction review your will or make a will for that property alone.
Income Tax
The federal government is constantly making changes to the Income Tax Act. Your estate plan could be adversely affected by new tax legislation. A change in the tax laws could also bring new tax planning opportunities. This is one major reason to have your will reviewed regularly.
Corporations
Your will is not your only estate planning tool, and you should continually review your corporate documentation including unanimous shareholders agreements and buy-sell agreements.
Small Business
Your will should be re- viewed in conjunction with your corporate documents to ensure that your entire estate is properly tax planned, and that your business partners have re- sources to buy out your estate. Would you want your spouse to be in partnership with your business partner? Would you want to be in partnership with your business partner’s spouse?
Charitable Gifts
Changes in tax laws and in the charity rules requires that bequests and other gifts be carefully planned to achieve both philanthropic and estate planning goals. If you plan to make a gift to charity, you should review your will to ensure that you maximize the tax benefits to your estate and your beneficiaries.
If you make a charitable bequest in your will, or if you designate insurance proceeds or an RRSP to a
registered charity, then your estate will receive a tax receipt for the full amount received by charity. This may be credited against up to 100% of your net income on your final tax return, thereby reducing the tax payable by your estate. Any excess which cannot be used on the final tax return may be carried back one year and also credited against 100% of net income.
While the wording of your will may suit your situation today, a change in your family or assets could cause your will to be interpreted differently from what you originally contemplated. You can always change your will and it should be regularly updated to suit your changing circumstances and to address changes in the law.
If you are concerned about the cost of a will, consider that a properly drafted will is one of the least expensive forms of insurance you can buy. It is one of the best investments you can make for your family’s security, but can add to the cost of the administration of your estate if it is out- dated.
PLANNING FOR INCAPACITY PERSONAL DIRECTIVES (Living Wills)
What is a Personal Directive?
A personal directive appoints a person to make medical decisions for you if you can no longer make them. You can specify the types of decisions and the way those are to be made.
What is a Living Will?
A “Living Will” is the American term for a Personal Directive.
What if I don’t sign a Personal Directive?
If you do not sign a personal directive and you be- come incapacitated, some- one may have to apply to the court to be appointed as your guardian.
The court application is costly and is an intrusion upon the family’s privacy. The order has to be re- viewed by the court every six years.
What kind of Directions can I include in a Personal Directive?
- Appoint an Agent
You can appoint an agent to make personal decisions on your behalf. This can be a singe agent, such as your spouse, or more than one. Alternate agents could also be appointed.
In the event of disagreement, you could provide that a majority of the agents will make the decisions.
2. Come Into Effect
You can specify that the directive will come into effect only when you lack capacity to make a decision about any medical matter. You can name the person who will decide if you lack capacity. If you do not specify a person, then two medical service providers can bring the personal directive into effect.
Even though your Personal Directive comes into effect, you might still have the power to make a health care decision. The Personal Directives Act provides that a medical service provider (doctor, nurse etc.) must assess a person’s capacity to con- sent to health care each time that a procedure is required.
For example, if you were in a coma, your Personal Directive would come into effect and your agent could make health care decisions for you. If you recovered the next day, you can then resume making those decisions on your own.
3. Personal Decisions
You can direct your agent to make personal decisions on your behalf that relate to any or all of the following personal matters:
- your health care;
- where you will live;
- with whom you will live and associate;
- participation in social, educational and employment activities;
- legal matters that do not concern your property;
You can put restrictions on the type of personal decisions that your agent may make. For example, you may want the agent to make health care decisions but not make decisions about where you will live.
- Health Care Decisions Your agent must follow any clear instructions that you provide in your Personal Directive relevant to the personal decisions to be made. For example, you might include the following guideline:
I do not wish my life to be prolonged by artificial means when I am in a co- ma or a persistent vegetative state and, in the opinion of my physician, have no hope of regaining awareness and higher mental functions.
You might want to make very specific directions about the types of treat- ment that may be given in the event of your incapacity. For example, you could specify that you do not wish cardio-pulmonary resuscitation or chemotherapy, but that you want painkilling medications, even they medications might shorten your life.
If your personal directive does not contain clear instructions that are relevant to the decision to be made, then your agent must make the decision that your agent believes you would have made in the circumstances, based on your agent’s knowledge of you.
- Formalities of Signing
A personal directive must be in writing, dated, and signed in the presence of a witness. The witness may not be your spouse, your adult interdependent part- ner, your agent, your agent’s spouses or adult interdependent partner.
- Discussions with Family and Doctors
It is important that you talk about your personal directive with your agents and your family. It is not possible to specify every type of medical decision in a personal directive, and your agent will likely have to make the decisions based upon their knowledge of your wishes, beliefs, and values. This is why an open discussion is critical.
Your family doctor should be consulted when planning your personal directive. Remember that your doctor is not the one who makes your health care decisions; that is the job of your agent. But your family doctor will know your thinking on medical issues and can give valuable advice to your agent.
Such decisions will probably be made in the hospital and your family doctor is often the last person to be advised. Consider putting your doctor’s name and telephone number in the personal directive, and direct that your doctor be notified if you are hospitalized.
Keep your personal directive up to date. Your views about medical decisions can change over
time. Your views might al- so change if you are faced with an emergency or serious illness.
When can I make a Personal Directive?
The Personal Directives Act became law in Alberta on 1 December 1997. If you have signed a personal directive or living will prior to this date you should re- do it.
What is the difference between a Personal Directive and Enduring Power of Attorney?
An enduring power of attorney appoints a person, to manage your property if you become incapacitated. A personal directive appoints an agent to make personal decisions on your behalf. We recommend that these appointments be made in two separate documents.
The Personal Directives Act allows you to provide instructions for your future personal decisions and appoints someone to make those decisions on your behalf if you able. It is an essential estate planning tool that allows you to plan for your future incapacity.
Planning for Incapacity ENDURING POWERS OF ATTORNEY
Who will manage my property if I become incapacitated?
If you do not have an en- during power of attorney, then only the court has the power to appoint someone to manage your property once you become incapacitated. Someone in your family will have to apply to the court for a Trusteeship order under the Dependant Adults Act. This is a rather costly procedure. Le- gal fees will be charged for the initial court application, and every two years thereafter, the Trustee has to return to the court and make a full accounting of the use of the property.
What is a Power of Attorney?
A power of attorney is a document which appoints a person to manager your property. An ordinary power of attorney is revoked if you become incapacitated. If you sign a power of attorney before June 1991, it is probably an ordinary power of attorney.
What is an Enduring Power of Attorney:
An enduring power of attorney continues (endures) if you become mentally in- capable.
Court approval is not required.
The Province of Alberta passed the Powers of Attorney Act in June of 1991. This law enables you to appoint an attorney to manage your financial affairs in the event of your incapacity. There are two types of enduring powers of attorney: an “immediate” power and a “springing” power.
Immediate Enduring Pow- er of Attorney
An “immediate” enduring power of attorney gives your attorney the power to manage your estate as soon as it is signed and continues if you lose capacity. This type is usually more appropriate when you are leaving the country for a while and wish someone to manage your property while you are away. It can also be useful when you choose to have someone help you manage your money now.
Springing Enduring Power of Attorney
A “springing” enduring power of attorney has no effect until you lose capacity. With this type, you will name a person to decide when you have be- come incapacitated (perhaps a doctor or one or more members of your family). The power of attorney springs into effect when that person decides that you are no longer capable of managing your property.
You should choose the type of enduring power of attorney that is most appropriate to your circumstances.
An enduring power of attorney is a very useful document because it gives your attorney the ability to do anything that you could do with your property. Great care should be taken in planning an enduring power of attorney. It can be a very effective estate planning tool in the appropriate circumstances.