Last Will & Testament
Contrary to what is frequently published, everyone in Alberta has an existing Estate Plan! The real question is, “Who is the author of your Plan?” If you’ve prepared your own Will (hopefully with the assistance of professional advisors) and it’s valid, and up to date, YOU are the author of your plan. If you do not have a valid Will, Alberta’s government has a “default plan” prepared for you as part of the Wills & Succession Act, and the chances are that you will not like that plan. For example, you probably wouldn’t want your heirs to get their entire estate share at age 18 with no conditions attached.
Not having a Will may also drain your estate of some of its value. As the saying goes, “Those without a will have included lawyers amongst their heirs.” And the absence of a Will increases the chances that your survivors will be experiencing an ongoing “family feud.” A Will can let you decide who gets the family business or farm and who gets the family heirlooms and enables you to name your preferred choice of guardian and trustee if you have young children.
Even if you have prepared a valid Will, you should review it periodically to ensure the plan contained in that document still accurately reflects your wishes, beneficiaries, and belongings. Is it truly a “testament” of your life? It’s like reviewing your insurance coverage – does it still fit?
A current review of your affairs may also reveal opportunities for you to reduce the taxes you or your estate may be liable for. For example, including charitable gifts in your Will may decrease the taxes payable at your passing so that the gift is, in effect, funded to a large part, by the reduction of taxes that may be owed to the Canada Revenue Agency (which is nobody’s favorite charity).
The following circumstances are indicators that a review is in order:
- Your choice of Executor (now referred to as “Personal Representative”) needs to be revised. Perhaps he/she has moved away or may no longer have the time or energy to act as Executor; maybe a better choice has become available.
- You, or some of your chosen beneficiaries, have been married or divorced.
- You wish to add or delete some beneficiaries (kids, grandkids, siblings, friends, charities, etc.). Your priorities will likely change over time and, in some cases, a named party may have passed away.
- The value of your estate has increased (or decreased) significantly. A significant increase may allow for enhanced charitable giving (c/w enhanced tax credits). A significant decrease may require a more focused distribution of your estate assets.
Setting up a Personal Directive allows you to choose an agent who will have decision-making authority regarding your health care and personal decisions if you become mentally incompetent or unable to communicate. It also allows you to provide that agent with information about what type of personal and/or health care decisions you would like him or her to make. You could even name a team to act on your behalf.
Enduring Power of Attorney
This document allows you to choose an attorney who has decision-making authority regarding your finances and assets if you become mentally incompetent or unable to communicate. It also allows you to provide that attorney with information about what type of financial decisions you would like him or her to make on your behalf. And, again, you could name a team.
Suppose you do not have these documents in place. In that case, somebody will have to apply to the courts to become your Guardian (for personal/health care decisions) and Trustee (for financial decisions), and they may be restricted as to what they can decide on your behalf. Contrary to popular belief, surviving spouses DO NOT automatically have that authority!