As a lawyer who practises primarily in estate planning and administration, I get to know all kinds of people. I learn about their families, their priorities, their jobs, and their lives. Most of these conversations start with clients telling me that his or her situation is simple, though they all reveal that our lives are anything but.
This doesn't mean that everyone who walks through my door requires complex estate planning, but it does mean that we all need to take the time to consider what is important to us and make sure it is reflected in the three documents everyone needs: a Will, a Power of Attorney for Property, and a Power of Attorney for Personal Care. This article will focus on things to consider as you are putting together your Will, as I will discuss considerations with respect to Powers of Attorney in a later article.
A Will is a written document that sets out your wishes regarding what should be done with your property, and by whom, once you have died.
One of the first things to consider is who should act as your executor (or executors). Your executor is the person who is responsible for gathering all of your assets, making sure your debts and taxes are paid, distributing your assets in accordance with the Will, and, if necessary, obtaining probate. Accordingly, this should be a person you trust, expect to outlive you, and feel is capable of handling everything required to administer the estate. When selecting an executor, you should also be mindful of relationships among your loved ones. Nothing complicates the administration of an estate more than executors who cannot get along.
Another option is appointing a trust company, lawyer, or accountant as your executor. They will charge you a fee, but any executor is entitled to charge a similar fee (in practice many do not as they are also beneficiaries of the estate) and there is value in having someone who knows what he or she is doing look after your estate.
There are a number of different ways to leave property to individuals. You can leave an amount of cash, specific pieces of your property and/or personal effects, and/or a share in whatever is left. These gifts can be outright or in trust. There are currently some tax benefits to providing gifts in trust (though the federal government is looking at changing this), but you should be mindful of the costs and complexities involved with administering the trust.
Generally, a trust will be used to ensure that the best interests of the beneficiaries are respected. For instance, it is common to hold gifts made to young people in trust until they reach a certain age (this can vary, but most often it is somewhere between the ages of 25 and 30, depending on the amount).
Trusts are also often used to provide for individuals living with mental or physical disabilities. A properly designed trust in your Will is an important piece of the puzzle when looking to provide your loved one with a caring, supportive environment once you are gone. It is, however, only a piece of the puzzle and disability planning must be comprehensive and start while you are alive to put appropriate supports in place.
One of the most common complexities in people's lives (and estate plans) is the blending of families. Even when everyone involved gets along well, there is a natural tension between children of a former relationship and a new partner when it comes to dealing with your estate. There are a number of ways to deal with this, including through trusts or making separate gifts. What is most important is to give this issue and the relationships among the individuals involved some thought, including when you are choosing your executors.
Many articles have been written about the family cottage, and I am running out of room, so I will keep this section brief. If you have a cottage, keep in mind that there are a variety of ways to pass the cottage down to your children. Don't assume anyone wants to be left the cottage. Also, be sure that the tax implications of any gift are considered; more than one family fight has been caused because a parent left one child the cottage but failed to take into account that the capital gains tax associated with it comes from the estate.
If you have property in another province or outside of Canada of significant value, it is worth considering having another Will that deals with the property in that jurisdiction. If you are going to proceed down that path, be sure to consult with your Canadian lawyer to ensure it is done correctly and does not inadvertently revoke your existing Will.
The considerations that go into each person's estate planning are different, but the overriding themes are the same: talk to your family, get good advice, and give your estate plan the time and attention it deserves. It's your legacy.
Paul Taylor spends his days advising clients on their estates and capacity issues, and he is consistently reminded of how important it is for people to understand what they can and should be doing to look after their estates, and, in many cases, those of their parents. Paul is an associate in the Ottawa office of Borden Ladner Gervais LLP whose practice is focused on estate and trust planning and administration. Paul can be reached at 613.369.4769 or ptaylor@blg.com.